Folks good to be back happy Tuesday. So question came in about order types and I saw a few folks going back and forth about entering orders and this and that. Now some of you might be sitting in front of the screen all day, so you’re just entering at the market. That’s probably okay if you have training or you’re part of a training group or a trading desk, and that’s kind of how you all do it. I wouldn’t want to fit in though. I would definitely go against the grain myself. I’m a tough dog to keep on the porch, which is why I work for myself. But for those of you, if you’re coming at a 23 and you’re kind of struggling with that or you have indecision and you can’t be decisive, right? Because traders in my opinion have to be they’re self-appointed leaders. You have to be the chairman, chairperson, whatever, CEO and president of a company called you incorporated.
So since we get paid to execute, how can you kind of force yourself to execute when you have reticence? And the answer to that is a stop order. If some of you have an itchy trigger figure, itchy trigger finger, others can’t make a decision because you’re full of indecision, you’re scared. You’re afraid to lose money. So you overthink at exactly the wrong moment and you psych yourself out. You don’t put the trade on. Sometimes it’s okay, the trade would lose money, but it’s really painful when you find yourself having indecision. You can’t pull the trigger, you can’t put the trade on. Then it goes and it makes money. Then what do you feel? You feel dejected. What do you feel? Bullied? I don’t know what the feelings are. This is where you can start to look at your emotional model and say, how do you win?
What do you feel in your body when you have indecision? What is that feeling? Where do you feel it? Then if you don’t put the trait on and it goes and it works out, is it like, see, what does this always happened to me? Kind of nonsense. So where do you play that model out in other areas of your life? I just had a chat with somebody who had written and they had wanted to trade and get into stuff, and we figured out that after two years of hemming and haw person really wasn’t cut out for trading because they couldn’t bring themselves to put a damn trade on. They had a big curiosity about the market. They had an interest in math and financials. They liked patterns. They did Crossword puzzles, so they had all that going on, but when it really came down to managing the risk, they didn’t have the emotional constitution to do it. So I feel like I did them a big favor and saved them who knows, thousands to tens of thousands of dollars in as much that they couldn’t really pull the trigger. So it was a great curiosity to watch the market, but again, we get paid for taking on risk because where there’s risk, there’s typically some type of reward. Hopefully it’s very asymmetric, like some type of, at least financially speaking, three to one, five to one, that type of a

Payoff. But you have to understand too that there’s the emotional payoff and sometimes the emotional payoff could be the thing that’s actually prompting you to do something or stopping you from doing what you should do, what we call misfeasance. So you don’t want to find yourself doing things that you shouldn’t be doing, and you don’t want to find yourself not doing the things that you should, and in my opinion, those things should be using stop orders because it’s forced objectivity in the sense that if you’re looking at the chart and you’re seeing that the name is trading between support and resistance in my way of doing things, there is no trade there even if you’re in an uptrend. So if you know that you want to participate in the upside, knowing that you don’t want to participate when it’s in a trading range, even if it’s in an uptrend, you can easily put a buys stop order above the market, which will trigger and force the trade long.
You just have to get the inner strength to put that order in. You don’t have to sit there and do anything at the market. You can see where the market, if the market’s trading in 2021 or whatever it might be, you can put your order in above 21 and sit and wait. In fact, you don’t even have to look at the screen. And so I do get a lot of comments and like, man, I saw this trade from a mile away to my gut feeling told me this, but the result was I didn’t pull the trigger. So you have to ask yourself, why aren’t you pulling the trigger? What is it that happened that’s happening for you emotionally, right? Because tactically you know how to do it. Putting an order in on your screen is no different than filling in the fields of an email.
Who is it going to? What’s the subject? What’s the body hit send? It’s basically the same thing. So I don’t typically want to use limits because that typically infers that you have a price target and to be all respectful to who you are, I don’t feel like you’re smart enough to know what the price target is. You can have a hunch. You might say, okay, I’m buying it here. Here’s where it topped out before. So when it tops out there, it certainly can’t go through that. So I’m going to try to sell. If we get to that neighborhood, that’s not my style. I never want to take small winners off. I want to let them grow even at the risk of losing those small unrealized gains. It’s not worth it for me. It might be worth it to you Again, if you have a smaller account, because again, you want the validation, you want the emotional reward that you could book a winner. I get it once in a million times, the market will gap overnight or over the weekend. It doesn’t happen frequently, but it can. So you got to figure, like I said, it happened two or three times over the last decade. It’s not something that really happens. And when it does happen, and if you’re in something that’s strongly trending, you find out that the gaps actually are happening in your favor

Right now. There’s also trading in the morning before the nine 30 opening bell, so to speak. So there are opportunities to manage your risk there. I wouldn’t myself, if you don’t have any training, be a big participant in those markets. They’re kind of illiquid, but test the waters. All you can do is try. I guess the thing that I’m saying here though is that for where you might be in your career, and even if you’re a seasoned pro who’s just a little head shy, you came out of Q4 having lost some money, that’s now in the past, and there’s really nothing in that that can affect things going forward. All you can do is I made friends with a guy named Ken Ravizza who was the mental baseball coach for the Chicago Cubs at one point, and perhaps a few other teams. My boys were very competitive baseball players growing up.
So we’d work on the mental game of it, right? Because just like trading, just like juujitsu, a game of failure. So how do you go shoot, if you’re hitting three, 400, you’re doing really, really well, but that can weigh on you emotionally if you don’t like the feeling of failure. And so he and I got into chatting. I wouldn’t say we were buddies, but we know each other. He since passed away. Rest is soul. And he would look at my sons and say, look, what’s the best thing that you can do? You can put your best swing on a pitch. That’s it. That’s all. You can control where it goes, whether you hit it or not, whether you pop it up or not. Whether you ground out into a fielder’s choice, whether you find a gap, you have to think that you’re going to have a couple hundred at bats.
And so half the time, if you can put the ball in play and make solid contact, good things happen. Put the ball in play, move runners, right? Control the controllables. So I’ll look at you and say the same thing. What’s the one thing that you can control? You look at your charts the night before, you know where the ranges are, the levels are, and you put your orders in accordingly. There’s nothing really to think about. You’re not trained to sit there and think about stuff on the fly, and if you think you are, in all due respect, it takes years and years and years to get there. Now look, if you’re 10 years a prop trader, tell me to shut up. But if you’re newer to the business, you’re nowhere near being in that neighborhood of being able to sit there and kind of figure things out on the fly.
That to me is a big mistake that newer traders make all the time is think that they can look at tick data or one minute bars and kind of infer where things are going to go. Far better for me, if you want success and if you want it quickly, is to know what your levels are the night before. Worst case, the morning of I feel not prepared if I’m doing it in the morning and then have those orders ready to go. There’s really not a lot to think about. In fact, if you’re not trained, overthinking at the exact wrong moment is probably robbing you of the opportunity. You’re afraid you’re in fear,

You know, think you want the win, but if you can’t pull the trigger, you’re kind of stuck, you see? So one way to alleviate that is to think in terms of putting your buys stops in above the market and let ’em sit there. If they get filled, great, you didn’t chase or you didn’t try to buy on some kind of pullback thinking that lower prices mean more value, they don’t, right? You’re not a CFA and even I teach CFAs, and although it’s a very hard three-part exam, no one can predict any better than anybody else. Humans are very bad at that. So education that’s not going to help you in many. It helps you understand things. It doesn’t help you trade any better. So that’s what I’m trying to do and bring value on the channel, is to help you understand that there’s some myths out there that somehow if you’re looking at things in one minute bars, that you’re more in control.
I don’t know. If I’m looking at one minute bars or daily charts and I buy something at 22, what’s the most I could lose a hundred percent? I don’t think seeing things in one minute bars, which is super random data, is going to help me predict the future. In fact, to the untrained eye, it’s more than likely to induce you to do something stupid. E get into a trade that you don’t have any business getting into, or two, this is the thing that actually kills more traders than not, is sitting there taking small $50 gains. Now, this happens to the folks who are trading the micros, right? $2 per point move. So you catch 50 points, you’re like, I just made a hundred bucks. Boom, let me take my gains. I’m like, go work at Starbucks. You’ll make more money and you’ll hopefully get benefits. Maybe you’ll get free breakfast and lunch too.
You can’t sit there and try to figure this stuff out on the fly, especially looking at your p and l and one minute bars thinking that’s how you’re going to trade your way to financial freedom. It’s something that you ought to make up in your mind, like I tried doing that all of 22, all of it during 23, now’s the time to make that change. Do yourself that favor. Put your orders in, let the market come to you. If they get filled, great, adjust and enter your protective stops. If you don’t get filled perfect, you didn’t chase, you didn’t buy something that was wishy-washy or in a trading range, come back and do the same thing tomorrow. But the key is intentions, equal results. So you have to put in your orders if you’re, because in order to make money, you have to have the risk, the financial risk, and you need to have the emotional risk. Unfortunately, there’s no way around it. Now, over time, you can lessen the effect of the emotional impact of it because your skin will thicken with experience in any industry, not just trading. So what I would do is sit there and say, I’m going to look at a few instruments. I’m going to put my stops in. If the market comes to me, great. If not good, it means I didn’t chase, right?

You don’t be executing at the market. Wait for your levels to get hit, and if they get filled, great, if not, come back tomorrow, enter the same orders, or sometimes the things fall apart and the markets roll over, right? Look what happened to Nvidia again, it can’t, at least from where I’m sitting right here today recording this, it can’t take out 500. So I don’t want to try to cheat because if I’m at 4 75, to me, how much could you lose all your money? So it still could go four 50, and I don’t want to go long at 4 75 to 500 via four 50. You see what I’m saying? You can figure out what kind of drawdown you want to withstand and represent that, of course, in your position sizing, which is kind of where we make and lose, but the entries and the exits are secondary, in my opinion.
You make your money with your position sizing, and then therefore you’re comfortable with your position size. Furthermore, you’re able to enter your buy stops and or your sell stops, right? Buy stops you can use to enter the market. Long sell stops you could use to both protect your cash and stop out as a protective stop, or you can place sell stops below the market to enter the market short and add risk that way. But that’s my 2 cents on it. Obviously, you can go on and on and on about these things, but I wouldn’t be looking at one minute bars, intraday, sitting in front of the screen trying to make a hundred bucks. I put my stops in, walk away from the screen, go do something productive, make money, and if my orders get filled, well, then that’s great. So you could technically have two days going at the same time.
You can have your trading day going where the stops are kind of minding the market for you. There’s no point in sitting there watching it, and then do something productive that might be able to make money, do your side hustle or this and that so that you can further endow your account. Anyway, if you have more on it, shoot over your comments. I don’t need any instruction on it, but if you have a question about how to better optimize what you’re already doing, then by all means, I’m all ears. Happy to help you. Thanks very much for being here, folks. I’ll see you.

Hey everybody, it’s Michael Martin. Welcome back. Hope you had a great break. I know I did. I needed some time off, man. I was crispy, creamed out. I was burnt out beyond just lots going on in my life, which is good. Keeps me busy, but I was really fried coming into the Q4 for the most part, so appreciate your patience. Glad to be back. Hope you’re doing well. Hope you’re off to a good start. Got a lot done. I have a lot to tell you. I won’t do it today, but there’s a lot of stuff I planned on. Going to have a couple guests on some guys that sooner or later should be really, really good. Got a lot of great email from you all and some really good comments on the channel so we can kind of keep that going. There’ll be a couple of changes, but nothing that’s going to really I change in terms of the daily flow and gans just doing very, very well.
He’s on a tear now, actually. I just saw him yesterday. We were chatting for a bit, so his time with the show on Wednesdays might be in much more limited if at all coming up just because he’s going gangbusters. His team is going great and they’re doing all kinds of promotional things and endorsement deals now, so it’s exactly what he wanted and I couldn’t be happier. That’s kind of what we had been planning on and talking about all the while. So that might change, but in terms of the content, this and that, not really going to change all that much. I may do some educational webinars on the how to part of trading, especially if we marry it up to the psychological and the emotional part, so that’ll be awesome. You can still get the transcripts if you want. That’ll be great. The videos will be good.
I got a few people helping me behind the scene on the production, although quality content trumps production value a hundred percent of the time, so that’s going to be my focus. I do have only limited amounts of time to do the show. At any rate I wanted to get going. The first thing I want to talk about is timeframes. Someone left a comment, I don’t remember which one it was. You can see it because it’s all public about. Can you explain why? Or you don’t look at intraday timeframes anymore. And so I don’t know if I misspoke or someone misunderstood, but my thought process on timeframes has always been look at the longer timeframes like weeklys and or monthlys because that takes out some of the randomness of the move. We’re going to always have randomness. There’s no way to get around it. But if all

You’re at is intraday, you might look at something like an intraday high being something material when it doesn’t line up with the higher timeframes. So that’s why I said intraday is interesting. It might help you understand where there’s real supportive resistance, but only if it tags into higher timeframes, right? Otherwise, and I know why you do it. If you have a smaller account and you’re kind of looking for the action, you can only afford to do the minis or the micros, especially the micros. Sometimes you’re stuck because there’s not too many of those instruments out there. And so if you’re not looking at intraday highs, even if they don’t line up, it’s like there’s no trades for you. And I understand that, but I’ve always also advocated knowing that people might find themselves in that situation that at the end of the day, it’s very, very difficult to trade when you have a smaller account.
What you don’t want to do is find yourself falling into bad habits, and this kind of is one of ’em. If you’re just focusing on intraday only, you’d want to see it kind of marry up with higher timeframes and see where is there some type of material to that lower timeframe, because the price on the lower timeframe means something more in certainly the daily and even better yet, the weeklies. So that might be a place to kind of start, actually, don’t start with the intraday. Start with the weeklies and say, okay, it looks like something’s forming here on the weeklies or whatever. Let me break it down and see where we are in the dailies. Then if there’s something in the dailies, then you look for something on the intraday. It’s all based on the price. I don’t need indicators. I don’t need moving averages that converge and diverge.
I don’t need any of that stuff. Just look at the prices on the higher timeframes, because if you achieve higher prices in the higher timeframes, there’s so much time where they could have corrected or failed and they didn’t. So to me, again, there’s money you want to be buying when there’s other buyers. You know what I’m saying? You don’t want to be trying to buy on pullbacks, and this might seem like it’s tedious or discouraging for even some of you, but it helps you. Your job is to disqualify, right? You’re not trying to load up a list of buys, right? Job is because most trades are suboptimal. So the thinking is your job as an editor is like, Nope, nope, nope, nope. Just like playing poker, you should be mucking your cards unless you’re playing head to head, of course, then you kind of have to go with it. But if you’re playing at a nine handed table, you can’t possibly be paying two, three off suit at a position, unless of course it’s part of your overall strategy that once in a while you have to do that to feign strength. That gets into it a little bit more. Most of

The time though, the person has the best cards going to win. So your job is to disqualify names from your wishlist. And I know granted, some of you are just trading the micros because you don’t have enough money, but that to me isn’t an excuse necessarily to start bad habits. If that’s the case, I know this is going to sound crazy. You’re better off sitting on your hands and waiting days and weeks if you have to in order for the trade to set up, because otherwise you’re doing it for the action, right? And if you look at what are the two potential payoffs for a trade, you’ve got the financial payoff, you’ve got the emotional payoff. Don’t trade because you’re bored. You’re better off preserving your cash. Go find a side hustle. Keep adding more money to your account and go about things that way. Anyway, that’s all I got for you today. I don’t poo poo intraday necessarily. It can be revealing, but only when it marries up to the higher timeframes. That’s the way I do it. Anyway, I hope you’re doing well. I want to hear about your breaks, leave your thoughts, how you feel about this stuff in the comments. For sure. I see everything. I appreciate you all being here. I’m glad to be back. Had a good break. Hope you did too, and I’ll see you tomorrow.

Hey everybody. Happy Friday. So for this episode, I want you to think about all the things that you want to achieve in 2024. Don’t start the planning process in the middle or the end of January. At that point, it shows intentions, right? Intentions, equal results. Now look, if you’re slammed and you have too much work going on, I guess that’s okay, but if it’s important enough to you, you would put it high on the agenda to get that done. As far as the end of the year tasks, this should be a natural part of who you are and what you do is planning and organizing, deconstructing your behavior, and also constantly setting goals even as you hit the goals that you had set in previous periods. Now you need to set new goals. You don’t just want to coast, which is what happens when you don’t have goals.
Now, I’ve said before on the show, goals are important because they explain a process. The goal that most of you have is a number value or it’s something that you want to attain, a car or a house, this and that, and that’s all great, but to me that’s the runny nose of the cold. You need to have a process in place that you can follow period after period that will get you the results so that you can go and get that stuff, which is usually based on money. So I would think you can use dollars for sure. I like to think in terms of percentages though, and then also set goals around the feelings that you want to feel, the feelings. I wouldn’t say the feelings that you don’t want to feel because whatever you say, you tend to get what you say. So I wouldn’t say I don’t want to feel fear and anxiety because that’s giving them power.
What I would say is I want to feel peaceful and in control. So say things in the positive, say it in the present tense, and think about that way too, because the emotions and the things that come from your subconscious oftentimes have a lot of power over what you do. To me, that’s the engine of what’s driving all the behavior, right? If we’re pleasure seekers on some level, a lot of it comes from your subconscious. Now, some of you have financial responsibilities, and so you’re much more evolved for sure, and so when you’re in the zone, when you’re not, it’s the market and when it’s, that’s why we say if you’re not in a good space, take a couple of days off, get your head together because the financial damage that you could do might be more punitive than it has to be. So when I think of goal planning and how I want 24 to unfold, I think about the feelings that I want to feel over any given day, and I think about the things that I want to achieve given the gifts that God’s given me and the abilities that I have in my life, not just in and around trading, and then making sure when you marry all that stuff

Together that it shows a sense of harmony. I don’t want to go overboard on the trading and then sacrifice other stuff. I kind of want it all. I want my personal life and my professional lives to blend and exist in harmony where one isn’t. I don’t want to rob from Peter to pay Paul as they kind of say. So I think about the balance of it all so that I can have a very rich life. I think about people that I want to meet, places that I want to travel to. I think about evolving my painting. I think about becoming more in tune with the markets and what new things can I learn that I don’t know what things that I fail at previous stages of my life that I want to come back and revisit. I think about the amount of time I want to contribute to the study of my craft in addition to what I already know how to do fairly well.
I think of business ventures and I start to map all that out and think about, okay, who do I need to know? What do I need to do in order to make all of that happen? What do I think the feelings are going to be around those new endeavors? Because anytime you invite something new into your world, there’s the potential for failure, but I don’t have a fear of failure. That’s just the way things go. If you’re going to endeavor and take on new things, there’s going to be failure. It could be that you spend time on things that don’t come to fruition. It might mean trying a new style of trading that doesn’t work out and you end up losing money. You can figure that all out at the beginning before you even put the risk on and have an idea and process those feelings in the ever evolving moment of right now.
So that’s kind of how I look at planning is I start to dream and you start to dream big dreams, make them absolutely ridiculous, make them fantastic, make them not even practical, because if it’s practical, it’s probably something that you already know how to do and it’s probably not going to be life-changing. The thing around goals for me is around personal growth. What do I want to become? Who do I want to become? What kind of role do I want to play in the world and in my own life locally as I grow older? And some of that means also from a charitable standpoint, what can I do to give back to the community? How can I add more value to help people out along the lines of think and grow rich kind of stuff? What’s the most value that I could provide for the community given the time constraints that I have and where for the things that we offer for coaching and stuff, where is there a good exchange of value?
What’s fair for the amount of work and the value that we present? What’s a fair price? What’s a fair amount of time to make that commitment to the community knowing that even though there’s an exchange of value, there’s a tuition and there’s value presented, it’s still something that you have to take seriously because it’s not just about trying to hustle money from people. You have to deliver the goods. We get very good grades on that because it’s absolutely part of my consciousness. If I have half a crumb, I break it in half, I’m going to give you the bigger half of the crumb at that point.
And so that’s the way I think of things is to evolve and dream. And I’m a visual learner, so I tend to take out, I got notebooks everywhere. I tend to take out journals and notebooks and start the storyboard and just write the stuff out in the present tense of what it would look like, and then after all that daydreaming is done, I’ll go back and read it after a few days and say, it is not like the things have to be practical because most of it’s impractical, but then you’re like, okay, creatively using my imagination, my will, my memory, what is it that I need to do to just get started? I don’t need to know all 10 steps. That would be overthinking things. I am the kind of person who’s very entrepreneurial, entrepreneurial, and I’m very confident in myself, so much so that if I want to start something, I usually pick up the phone or send out an email to get the ball rolling.
I’m not worried about step number two. I’ll figure that out when I get there. I think for a lot of you in the trading world, you can do that too. Don’t sit and overthink stuff because the reality is that if you don’t have enough experience, you don’t have any feel and the market is probabilistic. So you could sit there and overthink everything for ages, and then I’ll come back to like, well, what is your goal? What is it that you want to do? Do you want to trade? Or do you want to evaluate and analyze the markets?
And so in there you have to figure out what do you want to do? How do you want to spend your time? What are the results that you want from that process or those processes together that make up a system? Because running some type of a system, whether it’s using one of the engines like I mentioned, or you’re a chart reader, it’s all a big system, and your emotions and your psychology are largely running everything. That’s why we spend so much time thinking about it. The good news is that when the folks start to think about it on working with us, not only does their trading improve, but their lives improve because your emotional models you overlay on everything in your life. So be very, very honest with yourself because the more you discover about yourself, the better off you’re going to be. I know that sounds like a generalization, but I like to believe, especially having spent so much time with the trading community, self-knowledge is the key.
It’s the absolute key. And if you don’t know who you are, I don’t care what, I could look everything up, everything. When I was coming up, the internet didn’t exist, so you had to get it from books mostly, but for the most part, nowadays anything is a Google search away. So the idea that I need to have somebody in my life who has an encyclopedic knowledge of things is a bit of a waste because if AI doesn’t replace you, I don’t mind doing a basic Google search to find out things that are probably existing somewhere in the cloud. So remember, we get paid to execute. We don’t get paid to know stuff. And the question that you ask yourself for 2024 is what are you willing to do to hit your goals? What feelings are you willing to feel? Because that’s going to be the barometer and the gauge first for your acceleration and your deceleration towards those end results.
And that’s an exciting place to be because you get to determine what it is that you’re willing to feel. I’m willing to feel all my feelings. I kind of always have been. I was lucky that way, so there’s nothing that would get in the way of me achieving a goal or not achieving a goal. From an emotional standpoint, yes, there’s setbacks and there’s moments when things stall, more will be revealed, and those periods are where you kind of have to sit on your hands and think and get creative and say, okay, it didn’t work when I went this way. Now I got to go this way and see what information I can pull together and what pieces and resources I can put together in order to achieve my goal, but more will be revealed is the way I look at it. Anyway, I appreciate everyone very much.
It’s been a pretty good year for the YouTube channel. We’ve been able to get some good data from everyone who’s liked and subscribed, as Ganja would say, and I’ve learned a lot too. I get to revisit all these lessons which are very, very primal. I think for traders, it’s important to be able to reiterate the heuristics that are important and the key performance indicators based on your trading. My trading. It’s also important to understand what makes you tick because then understanding that to me once what makes you tick, then finding the right trading strategy or process to follow is a lot easier. That’s kind of why we focus on this stuff here. That’s why I try to respond to all the comments and the questions myself because I have a lot of experience of experimentation and things not working out as I evolve and continue to evolve myself.
That being said, I wish you all a great rest of your year, which would include any of the holidays coming through New Year’s. Be careful, be safe, and I’m going to take a week or so week, couple of weeks off here and collect myself, do the things that I talked about yesterday and today for myself, and come in and hit the ground running for January of 24. I’ll be back in a couple of weeks and I’ll see you in early January. I wish a good holiday season, a great new year. See you in a couple of weeks.

So coming into the end of the year, you’re probably in a bit of a reflective mood, right? Calendar year, not necessarily fiscal year. You’re probably reviewing or about to review your trading year. How did it go? What did you do? Well, what did you fail out? Failing’s not a bad thing either, by the way. You have to experiment. See what works. Sometimes you have to amend your trading rules, you have to pivot. The times change. I think that’s probably more true for the folks who are doing things on the short term side of things rather than folks who are trading in the longer timeframes. But I wouldn’t wait until we get into the busier holiday season or into January to do the review. I think the review should start Now. I know that’s what most pros are doing, all types of postmortems anyway on their trading and how they performed.
They go back and review their journal, and it’s not a diary, but it’s like what were they thinking at the time from an ex anti standpoint? And then what happened from an ex post standpoint? This helps you also kind of figure out what was your intuition telling you, right? What did you anticipate was going to happen? What did or didn’t happen and what was the result of the trade? This is how you can really grow by reviewing your behavior, right? Because behavior predicts where you end up, not necessarily what you think you can sit and ideate all day long, but ultimately you’ve got to put the trades on. There has to be a theory, a thesis. There has to be a trading plan that you execute, whether it’s discretionary or purely systematic. Discretionary to me is chart reading. And even if you have systematized risk parameters, it’s still based on a little bit of art and science where someone who’s doing something purely systematic using a trading engine like Mechanica or trading blocks for example, that would be pure science as far as I know.
Now, everything at the end of the day is discretionary, right? Because then you still have to choose the inputs. You have to choose, in other words, the inputs being, you have to choose what the entry criteria are. You have to choose how to measure the volatility for position sizing and what we call trade management. You have to measure and figure out what your exit criteria are going to be. And then you also have to figure out along the way, what are you going to do while you’re in the trade? Are you going to add to it? Do you adjust your protective stop when and at what time? At what prices? At what volatility? Measurement? How do you measure the direction of the trend if there is one, and this and that. So you look at those results then and without any judgment on yourself, you can go back and say in a kind of humorous way, what was I thinking? Because that’s what I do. Why did this look so good on paper and not really work out?
So one of the things, if you want an example in my life, because it’s not just about the trading. Some of you who are longtime listeners probably remember that before, I don’t know what it was, maybe February of this year, we had been doing more audio only types of episodes and we just found out we got much better engagement when we had video. So that was something that we got from doing the postmortem. I had a few things I had to get done, which is why I didn’t start it in January, which first, but that was a result of that type of reflection.
And you sure you can go back and say, I should have started sooner. But based on what you knew at the time, you did the best that you could. The same thing goes for your trading results. What did you really nail? And so of course you can look on your averages. What was your average winner? What was your average loser? What’s your average holding time? See if you can extend that, right? Hold your winners longer. You could also look at say, what’s your largest winner and deconstruct why it was the biggest winner. What was your biggest loser? Usually the biggest winners for the short-term folks were there was just a big move or a big announcement, and you were in the right place at the right time. So it was kind of random that you were there. And the biggest losers for most people are instances where you had a protective stop in and you moved it and you took more of a loss than you should have.
Or you kind of got emotionally invested in your trading and you were on a winning streak and you might’ve started trading too big or too frequently, and then the markets reversed on you and you took a bigger hit than you should have. But in that process though, you get to investigate the next part of the review, which is your feelings. When you look across all of 23 as you do your review, what was the predominant feeling that you had? For a lot of you, it’s fear and dread. If you’re in a winning position, you feel fear that you’re somehow going to lose it. So you need to process your feelings around taking risk, right? Because they’re not going to go away. Whatever you feel that’s good, look at what the process is that you’re following that gives you those feelings. Keep in mind you’re powerless over what happens in the market.
So it really comes down to your behavior, which is what you can hopefully control powerless over what the market does. So there’s no sense in getting all fraught about it. So then take look at your diary or whatever your journal and take a look at over the course of the year, what feelings do you have that you’re having to process every day that keep recurring for you? Because in my experience, people who are highly emotional that those feelings don’t just go away on their own. There is no frequency of gain or magnitude of gains that’s going to make that feeling go away. The market’s going to keep pushing your buttons, so to speak, so that those feelings are in the forefront of your mind. This is the kind of stuff that we do in the psychological coaching is like, where do they come from and help you process those feelings with behaviors that are very, very conducive to success, because I know for sure they’re not going away.
They didn’t for me until I sat down and I addressed them and kind of figured out where do they come from? Usually they come from your upbringing and the environment that you were in or currently are in, and you have to address them. So over the course of time, you can see your trading rules, which is what most people take solace in. They do all the physical and the tactical aspect of the trading, but they don’t work on their inner game and their inner voice. And if you do that and you look across the Q4 and all of 23, you might be able to see evidence of what your emotional model is, which to me is the engine. That’s what’s really driving stuff. Now, I’m not a psychologist, but I just know that if you are in constant anxiety, somehow you win from that and trading then becomes a mechanism for the purpose of delivering anxiety to you. Is that really what you want going into 24? And if you have feelings of insecurity, where do they come from and what actions can you take? What courses can you take? What can you do to process your feelings around that? To build a stronger emotional model, it’s very difficult to make big money in the markets if your emotional model is weak. And it doesn’t mean to be carefree and act like reckless with respect to risk taking.
You can take prudent risks and still have an enormous amount of anxiety. But I don’t know too many traitors, I can’t think of any who are overworked with anxiety and fear that make what they think based on their goals are the returns that make the whole thing worth it. Which brings me to another point. If you’re putting so much time in and you made X amount of money, you might consider trying to gauge your level of success in the business, and that usually isn’t going to come from a dollar amount. You could look at a rate of return, compare it to a buy and hold, but then also look for the amount of time that you put in both for preparation and then sitting at the screen. What’s your hourly wage? Some of you might actually be shocked on how low it is.
So these are just a few of the things that you can start to look at as you deconstruct what your 23 was. What were some of the themes? Did you get your ideas, like investigate everything? Because then you could trace back, like we were talking about, your average winner, average loser, biggest winner, biggest loser. You go back in time and see, okay, where did this all originate from? Where did I get my ideas from? Did I look at data or was I chasing headlines? Because that’s also very random. And this can give you insight on your behavior, which to me is the key. Your behavior is very, very important. It predicts where you end up, and most people don’t succeed long-term just based on luck. We’ll take it. We have to. We’re going to take the bad luck. We might as well take the good luck all of us.
But running a system or trying to run and think of trading like a business, for example, and having your success just based on luck, that’s hard to sustain. Now maybe you have great imagination, you have great intuition, so you’re able to put yourself in the right place at the right time very frequently. That’s probably a skill at that point. You have a good feel. Most people don’t though, so you have to look at that and figure it all out. So those are my thoughts on deconstructing the year. There’s very sophisticated ways to view it, to do it. We have in where we work, we have a definitive process on breaking all of that down. I’m sharing with you some of the highlights. We tend to go down and look at it from a microscopic standpoint because we really want to know. We want to evaluate with some very rigorous honesty. Again, what makes us do the things that we do, what trading is, it’s things that we do. We enter stop orders, we buy or sell at the market. Like all of your behavior adds up to results. And I’ve always said, even from when I lived in New York, that you have results and you have excuses.
And I don’t want to live in a world of excuses. I want to be absolutely in control of what I’m doing all of the time. So that requires having a good attitude. It requires having a fairly decent amount of discipline, for sure. Having a good attitude is really, really important. It’s hard to have discipline when you’re in a pissy mood, but at any rate, those are some things to consider. I appreciate y’all being here, and I’ll be back tomorrow. Take care. Thanks for being here.

Hey everybody. Happy Tuesday. Today’s episode should be short and sweet. I want to tie it up the week. I’ve put a lot of good material out there this week, at least from what I can see. Based on your comments and your feedback and the thumbs up and the likes and the subscribes, I appreciate the data. It helps me understand what’s important to you, and that helps me kind of culture the pearls here so that I have something to say that actually is going to resonate with you. So today’s response is going to come from question Blazen put up on a video that was called Use This System Trading Rule to keep more of your profits. In that video, I was saying that there’s evidence for some of your momentum style trading models where you might find yourself in any number of names at the same time, 3, 4, 5, 6 instruments.
And because of the natural order of things and how markets work, you can find that there’s a deluge of buying power that are coming into the majority of those names, in which case you can see the equity on your account. Remember I’ve said trade your equity curve start to burgeon, and then I said, from a backtesting standpoint, as opposed to having a protective stop on each and every one, which you should have anyway in terms of making money and keeping profits, you’ll have to backtest this based on your rules. But I have seen evidence in certain systems where it makes sense that when the first instrument starts to weaken and get stopped, that could be a trigger for you to actually exit all the other names as well, because there will be a natural ebb and flow of things. This is obviously a swing trader style idea.
It is not a trend follower because you wouldn’t get into a name for one day and stay and puke it out at three days if there’s just a modest pullback. So it’s a different mindset. But for those of you who are swing trading, taking things home overnight, taking things home over the weekend, and are taking advantage based on these momentum pushes, if you will, there is evidence that trading the basket and piecemealing your way in both to the individual positions, adding to your winners perhaps, but then also you could trade the basket. It’s a little technical to talk without charts and you need a system to do it, but that’s what I was getting at. Now, blazen said, thanks again, appreciate the insight. When you say puke out the whole thing, that means that in every position, every share of every instrument that’s in your portfolio goes, does this mean going into each position and entering a limit sell?
Nope. Those orders would be sell stops, not limits. I don’t use limits, and I don’t think you should either, because when you’re long, a sell limit would be above the market, and that would mean you have a price target. Your sell stop goes below to protect your capital. That’s what I’m talking about. So you need to know the difference between stops and limits. They’re very different orders. So limit, as far as I’m concerned, isn’t Look, if you’re trading a gigantic fund, and you heard Gordon Gecko, right when he gave Bud Fox the first order that was a limit order when he said three-eights tops, that’s the limit.
Slippage and skid can matter. If you’re moving gigantic amounts of inventory with decimalization and things trading in fractions of sense, basically the number of slippage and skid for the average person watching this show should not be an issue. Again, if your account is underfunded, you feel every little breeze as a hurricane, I get that, but that’s not anything I can help somebody with when their account is underfunded. So again, it’s a swing trading idea. You put the orders in and you could look for one of the names, maybe two of them. You’ll have to backtest this yourself to see where the momentum is stalling, and then when momentum starts to stall, everybody leaves the party at the same time, right? So that’s the way that you would do it. It’s a great idea to backtest. I think I’ve done it from time to time. I wouldn’t call myself a swing trader, but I know it’s doable because I have done extensive testing in trading baskets of securities instead of just trading one at a time.
This is, I know just from an emotional standpoint, if you’re a person who trades one instrument, your whole life kind of hangs on that instrument and you can find yourself coming into the market every day like, man, I hope something happens today and I have seven different types of trades that I could put on this one instrument. And to me, it’s like, if the instrument’s not trending, then I don’t care about the seven instruments or the seven strategies. You know what I mean? So again, it’s a different mindset. You have to do what you think is best. Maybe your account is funded a certain way where you can’t really trade other names, you don’t have enough money. It’s a tough spot to be in, but again, you could be blinded by a lot of opportunity costs when you’re underfunded. So find a way to get the money and beef up your account if you can. Anyway, that’s the ethos of where this type of strategy comes from, is that it’s a momentum gathering strategy. And when the momentum’s over, then everyone has to leave the party at the same time. You could use any number of ways to stop out of the trade. You could put in a protective stop for one particular name, or actually all the names have protective stops. And then when one of those orders

Gets filled, then you just sell the rest of the positions at market and cancel, of course, all those other protective stops. So a little bit more detail there. Hope that helps explain things, but that’s where it goes in the trading course. We go over that with greater, greater detail, but it’s a different format. I’ve got the simulators up and you can see where the momentum ebbs and flows, but it’s not something I can do here. Anyway, hope you had a great day. There’ll be an episode tomorrow with Ganja, and then I will see you again Thursday and Friday of this week. And then I’m going to take a bit of a break and I’ll see you again in early January. Thanks for being here. Take care.