What’s cracking, ma? How’s everyone today? Happy Tuesday. So the thing that can help you with this whole stop thing is you’re probably settling for less when it comes to making money. And in my opinion, you have to be absolutely unreasonable with making money absolutely unreasonable. I mean, what the hell are you taking all this risk for to make peanuts? And so what I mean by being unreasonable is you can’t be satisfied making 200 bucks a day and then be like, yeah, I’m showing everyone my trade ticket. I just smashed a trade for 200 bucks. If you’re doing that, you’re probably thinking about that’s like a sushi dinner for you and a date maybe, or it’s your favorite pair of kicks. Like again, get out of thinking in terms of dollars and start thinking in terms of percentages and start to envision for yourself how a current trade that you’re in could increase your assets under management, your account balance, your corpus, whatever the number. The thing is, it’s all different ways to say the same thing. How can that move the needle by five to 10%?
Don’t get in the habit of taking one quarter of 1% trades. Now, if you get stopped out at those levels, that’s the way God wanted it. But for the most part, your intentional activity should be, I’m going to put on a trade I’m going to add to my winners. I’m going to add change and adjust my protective stops as I need to, but I’m demanding from the market. Monster gains. Don’t tiptoe your way into futures. It’s the wrong industry. You have to be very, very brazen with your intentions. You can’t come in, be like, go, please give me some money. Please, Jesus, that’s not going to work. You can’t come to the market with a fear-based mentality. You have to play superior defense. But that’s just like enter protective stop. That’s the best you can do. Watching it isn’t going to help you.
Watching the market’s not going to help you manage risk. Now, I can say that because my system is calibrated for that. I’ve had, like I said, three and a half decades of constant observation, so I’m in a different spot. But when I was younger, starting out, it was exciting to watch the markets, but I realized that I’m not trading for excitement. I’m trying to make money here. And that when I watched the market and I saw I had $200 in my pocket and I had two weeks to go, I had four different people that wanted that money who I, for the various bills that I had to pay towards the end of the month, I was like, man, I got to make things happen. I have to create more profits. I don’t want to keep being in this situation where I’m robbing from Peter to pay Paul.
And so I had to develop the other side of my business obviously and serve my clients to generate the commissions and the fees until I had enough assets under management to go out on my own and earn incentive fees. And that was a real game changer. But in the meantime, what I didn’t want to do is get excited about making a day’s pay in one hour. I had to get rid of that thinking. It’s an interesting observation, but it doesn’t necessarily serve you if your goal is to make big money. So again, you have to demand from the universe all the abundance that you want. Don’t be like, well, one day it’s going to happen someday. Someday doesn’t exist any more than you’re saying, I’m going to be a world-class trader. I’m going to be means future tense and the future doesn’t exist. All you have is right now, so you can make up your mind right now in the ever evolving moment of now, of now, right now, of right now, right now that that’s what you demand from the marketplace.
Then you have to conjugate your behavior with that intention because it’s not going to come and kick you in the ass, especially if you’re cauterizing and taking off good risks. So the only way that I found able to marry my belief system with my behavior was to adjust my stops, stay in strongly trending markets and then stay out of my own way and stop thinking about stuff. Because going back to last week, if you were ready, willing, and able to risk a half a percent on any particular trade, what’s the damn difference? If it’s the initial half that would come out of your corpus coming into the day, right? Or you’re in a winning trade and you’re still risking that one half of 1%, why does it change? Because that’s the market communicating to you in no if and or buts that you’re on the right side of the trade. Again, whether it’s good luck, good timing or good analysis, what do you care? Figure it out after. You don’t need to think about it in real time. If you overthink things without being trained, you’re going to make the wrong decision all the time. That’s how I would bet against you. Not to say it that way, but I can count on you to do the wrong thing.
And the rest of us are like, man, it’s so easy to make money when you’re in a good trending market. Just stay out of your own way. Let the thing go. It doesn’t matter what happens on any given day, it’s going to go up and down in a positive slope. Y equals mx plus BM is positive. Great. Stay in the trade, right? I mean, you could write a children’s book on trading and say, okay, here’s the chart that you’re looking at. And if it’s not in the no, if it’s in northeast quadrant here, that’s a bi signal unto itself, especially if it’s daily or weekly. If it’s in the lower right corner, short it or stay, avoid. And if the thing’s going sideways for whatever reason, please for the name of God and everything that’s holy, don’t start down timing to look for opportunities. And that’s a message for you.
You stock index traders. If the trends aren’t happening on the dailies or weeklies, there’s nothing to do during the day. Find another instrument. Let the market do the work for you. It’s so easy to find up trending stocks for the love of God. I get so many emails from people who are struggling and they send me the charts and of course there’s 45 overlays on it and they’re like, man, these indicators are failing me. And I’m like, yeah, because they’re not indicators. They don’t indicate anything. They’re really confirmers. The price and the volume will tell you, especially price, everything that you need to know. What does Brian Shannon say? Only price pays. We say basically very similar things using different language, but the price will tell you where it wants to go. That’s the leading indicator, if you will. Everything else kind of confirms. So your indicators, again, are band-aids to help you deal with the feelings that you don’t want to feel around the uncertainty. Will my gains be there in the morning? Please, Jesus, please.
And I think you all get kind of uptight about this stuff when you should just let things unfold. And if you come in with that type of trepidation, granted, you always have to respect risk, right? So I’m saying macro. There’s the absolute minutia of managing the risk add risk with a buy stop above the market. Let the market come to you. Don’t chase your order gets filled, you automatically put in your protective sale. Stop. That’s the best you can do. Let the market activity unfold because you don’t know. No one does, and I’m not throwing names under the bus here, but people can have a good idea, they can figure that. They can have a good understanding of how things are going to go. But in reality, most people have a really bad at prediction. And I’m talking everybody from Bruce Covner all the way down to the guy who’s starting tomorrow or today, prediction is a sucker’s bet.
You don’t know all the forces that are at work. You don’t know what everyone else’s. Why are they in the trade? What are they doing? Are they adding to winners? Are there big investors who have hedge funds or forti act companies that have to step in and buy more stock? You really don’t know. You really don’t know. You can’t see most of that, and they’re selling you on wondering about what the market makers can see. It’s irrelevant. It’s irrelevant to how you manage risk. All you can do is put in your protective stops and if you sell short, you put your buys stop in above the market, the thing goes down, you can adjust your buys, stop lower. Don’t worry about your win ratio. If you’re winning 40% of the time, you’re going to be absolutely fine, but you need to start putting these things in context.
That accuracy is the name of the game. And sniper like entries matter. Nope, they don’t. You need to be relatively correct. And I’ve done, I’ve done some stuff and I’ve put orders in where there are massive amounts of slippage that would make you puke. I mean, thousands of dollars of slippage and skid on an entry, obviously we’re putting size on. So relatively speaking, again, it’s nothing to fret about because it’s a percentage game, but you need to start thinking abundantly and to start to think about how you are worth it or are you worth it? Maybe you have low self-esteem. Maybe you think you need to put in 10 years before you’re worth it. That’s not how my mind works. But this is the kind of stuff that we speak about in the coaching and the people sit back like, yeah, where did I get that limiting belief? Which parent taught me that?
Was it my overbearing father? Was it my engulfing and in devouring mom? Or was it some other sibling that was a know-It-all but is still living home at 32? You could make up your mind that that’s what you deserve right now. What the hell are you waiting for? I didn’t have a choice. I’m not getting into it anymore. I’m tired of talking about it. You all know if I failed on Wall Street, what I had to go back to and I didn’t want to do that. I was physically and mentally exhausted from doing that. I’d been working half my life doing that stuff and it was time for me to turn it on and work smartly now.
So that’s intention. When they say intentions, equal results, you have to believe that you’re entitled to it, that that’s part of who you are. Now, that’s what you do. You do the things that pro traders do. What do pro traders do? They manage their risk. They buy strongly trending markets. They move and adjust their stops and that’s it. And they let the big players kind of move the markets. And from lack of selling and increased buying, there’ll be ebbs and flows of the demand within the overall move, and all you do is have to hang on. Your protective stop will knock you out at the right time, but don’t think that you know better and that you can step in and figure that out on the fly by watching one minute bars or two and five minute divergences. Oh my God, that that process has killed more traitors than I think, than Bernie Madoff or Philip Bennett from Refco or John Corzine at Man Financial, or the other place. What was it? PFGBEST? Maybe I can’t remember all the firms that have gone wrong from egos anyway, think intentionally. You’re entitled to those if you do the work. Doing the work means putting your stops in and stay out of your own way and dealing with the emotional crap that really has nothing to do with trading. It’s your baggage that you’re bringing to the table that really doesn’t serve you, although you think it does. So you’re constantly wrestling with these emotions like, I want to make money, but I’m really afraid to

Lose. People feel pain a couple multiples more than they feel the pleasure of it. So the fear will pervade you and actually take you out of trades when you’re actually making money. Can you imagine the Vietnam that’s going on in somebody’s head there? I don’t want that. Anyway, those are my thoughts. I’ll be here tomorrow with Ganja. We have a great episode. I appreciate y’all being here, and I’ll see you tomorrow.

Hey everybody, it’s Michael Martin. Thanks for being here. I hope you had a good holiday weekend. I did. Today’s Friday, well, today is Friday, but it’s actually Monday for yous. I had a good Thanksgiving. I didn’t really eat that much, watch some pretty bad football and just did nothing. I like to have a day to kind of chill the most and not do anything, not think of anything. I also didn’t go shopping on Friday today because it doesn’t make me feel good to spend money. Someone asked about that a while back. His name is Michael’s good guy. I don’t please myself by spending money. Consumerism isn’t my deal. I live a very frugal life. What I do have is high quality stuff, but I just don’t have a lot of it in that I’m not into collecting things that I don’t need, and this whole Black Friday, cyber Monday thing is such a joke in that why you’re still buying shit you don’t need for half off.
I don’t understand why people think the way they do, especially if they have trading accounts that are underfunded. What is it that you need? I don’t really need much of anything. My best years. For example, even trading, I didn’t even have real time quotes. So anyway, I was speaking with a group of folks the other day and they were amazed as to how much marketing crap is out there geared towards day traders and day trading versus how the pros actually make their money. So I’ll probably doing some more content along those lines to see if it makes sense for you. Please be very vocal on what you think because again, I got better things to do than to create content that no one caress about.
I want to thank everybody for writing in and leaving the comments. I personally go through every one because it matters to me. I get a good pulse. That’s me taking my own pulse. I get a good pulse on what’s going on and what you care about. Also, the chats that you’re having amongst yourself in the comments. I tend to not encourage what we call crosstalk in that it’s difficult to give people advice on their trading when you really don’t know what it is that they’re doing or what their goals are, or especially how they want trading to serve them in their life. But again, win or lose, everyone gets what they want. So if you’re miserable and you’re still doing things the same way, somehow you benefit from that.
So today the topic is how soon do you move your protective stops if a position starts working in your favor? This is the gesture of when things start working in your favor. We talk with our hands in New York, I mean right away, which is kind of tricky because I advocate not looking at the screen. You definitely don’t want to be looking at your p and l during the day. That’s the worst thing that you could do because for the untrained eye, it’s going to induce you to do stupid things with your money. Take your wins too soon, which is how fear really pervades your trading. We’ll talk about that maybe tomorrow. So yeah, my whole thing is once I get filled on an order, like a hair trigger response, I put in my protective stops just to have peace of mind. I don’t really care about the outcome of any one particular trade, which is also why I don’t look at the screen and follow the chart and be like, oh yeah, it’s ticking up. Yeah, baby, I don’t care about that. I really put the trade on, put my stop in and then I go do other stuff. I have a couple of books on Basquiat over here that I’ve been reading. Again for the millionth time. I took a look at Brian Shannon’s book. Again, it’s a great book on anchored v Wap. Probably have Brian back on the show soon and a few other people.
So then I’ll set an alert and the alert isn’t a limit order, like a sell limit above the market that would take me out of the winner. The market going up is kind of intentional. It’s what I want the thing to do. So it would be way too early to try to get married on the first date. So I’m just trying to get into the position, have the thing work out, show me that I’m on the right side of the trade, whether I have good analysis, good luck or good timing, I don’t care. I’ll take all three, any of them because when things don’t work out, you have to take the dark side as well, Luke. So at the end of the day, you’ll set your alert. Where do you do that? Well, it depends, right? If you are using average true range as a position sizing mechanism, your entries and your exits are also going to be based upon that same number.
So depending on your sensitivity and your tolerance for risk, you can set that number at one half ATR. Currently on crude oil, the 20 day ATR is like $2 and 60 cents. So if you were short, which is the direction of the current trend, you might say you’re short at whatever, call it 77. So your protective stop can go in one half or one full ATR. It depends how you’re doing your position sizing and what number you’re using. And then as soon as it goes down, say a dollar 30, which is one half the ATR, right? So what would that be? 75, 70. You can adjust your protective stop to perhaps break even. I know a lot of you are like, man, a dollar 30 on accrued contract is 1,013 hundred bucks, and I’m like, so what

Are you doing it for? You can’t be happy making small amounts of capital, right? Don’t trick yourself into thinking that just because the number’s green that that’s necessarily good. You need to know what your why is, and in my opinion, if you’re going to do this, don’t go for blue collar. Don’t turn this into a working class job. If the trade’s working out in your favor, stay with it for as long as you can. The market will reverse at the bottom or it’ll start to consolidate and then you could start to think about stuff. But what you don’t want to do, especially if you’re not trained, is watch the thing tick in real time, in one minute bars thinking that that information is somehow going to help you because don’t know what you’re doing. You can’t think about this stuff on the fly. You need to make your decision first.
Put your stop in and then leave it alone. Don’t overthink things and don’t look at your p and l and get all fear-based. When you start making money like, my God, I’m just happy to be naked in bed with somebody. I’m going to take the first chance. That’s not how you make money. That’s in fact how you stay small. If you take small gains, you’ll never be a big trader. That’s not even just a truism. That’s an absolute truth. You have to let your winners run. Now, that’s tricky for some of you who like to offset your trades by the end of the day. I don’t know what to tell you. Some people just don’t like chocolate ice cream, so you’re going to have to figure that out for yourself. I’m not going to try to convince you, but I don’t want to have to reinvent myself every day, and that’s what they do every day.
They come to the market as far as I can see unprepared and try to figure things out that day. Like I’ve said kind of tongue in cheekly, there’s like three dozen guys who I know who have really, really good sense of timing and can do things like that. But the majority of people, although they can look and see what other people are doing within day trading or swing trading, they don’t have a feel for it. They were the last kids to get picked in gym class, if you know what I’m saying. And so look, I’m not calling your girlfriend ugly, but at the end of the day, if you don’t have a feel, it’s time to move on and let time heal all wounds and extend your holding periods and invite the success that you think you want at least. But I would adjust going back to the main topic, that you would adjust your stops as soon as possible. If you’re trailing structure, that’s a little bit different. You can wait for the end of the day, leave your protective stop in, wait for the market to close, check out the screens after the close. Maybe you don’t even adjust the stop. You put the same order in the next day. I’ve done that for weeks on end.
I’ve done that for weeks on end. In fact, I’ve done it for six weeks at a clip in a particular trade. I might’ve shown it with you, it was probably one of the longest times too, where I got in early in like oh 5, 0 6 on a sugar trade and it stalled and it went sideways. It didn’t knock me out, but every day I would call the floor, put in my protective stop and it would just sit there, and that was from, I want to say through the entire month of September into the first half of October before it started making new highs, and I added more to my position.
So you have to have the discipline and the stick to itness to be able to handle that and not necessarily worry about what happens day to day. I think some of you’re watching your p and l much too closely, and although I believe you have to trade your equity curve, which I’m not going to get into right now, you do have to stay away from looking at your p and l. If you’re trying to trade your daily p and l, chances are you’re a very small-minded thinker, and without the right training and without the right discipline, that is going to induce you to make decisions that are not in your best interest. You think they are because they feel good, and your feelings at that point in your life are like facts. But you learn if you’ve gone to any 12 step program, that feelings aren’t facts, so you have to find a way to subvert your strong feelings and realize that what feels good is not a good financial decision because of the fight or flight mechanism.
There’s probably a lot of reasons, but fight or flight is one of them. As a trader, you’re putting yourself in harm’s way, and the quickest way to make more money is to let your winners run. Take it home overnight. Take it home over the weekend. You always have protective stops. Don’t be afraid of what you can’t see. There’s no boogeyman under your bed. I can say maybe once a decade, there’s a trade where it moves sharply against me, and so that’s not enough. It’s not material enough to scare me from doing good financial decisions. In other words, some of you are so afraid of overnight risk that you’re like, oh, no, no, no, no, no. What are you crazy? And I look at that and I say, the opportunity to cost to you, the opportunity cost for you in that space of having that feeling of this is costing you millions because when things are trending, you’ll be making money for reasons that you don’t even know, and I think a lot of you might be uncomfortable with that.
You have to know shit. You got to have your stuff all lined up. You got to have your hockey. You got to have your mouse here. You got to have your headphones with the thing on. It’s too close to your mouth, by the way. I don’t need to hear every pop and snap out of your mouth, so get rid of that. That doesn’t serve you. If you want to make money, put on a small piece and let it go. It’ll grow to really, really big stuff. Quida doing that is to adjusting your stops. You could do that every day. Like I said, if you adjust using ATR, you can set alerts. If you’re trailing structure, whether it’s support resistance or swing lows or swing highs, you can figure that out based on your trading, but that’s what trading is to me. It’s adjusting a book of stops. One day we’ll have a discussion too about some of these guys who are saying the market makers can see your orders. Well, guess what? They can always see your orders. Unless you’re doing things at the market, which I don’t advocate, they can always see your stops and limits. Anyone with a frigging level two can see them, so I don’t see what the big deal is.
You have to protect your capital despite what these fear mongers are trying to sell you. You have to protect your capital. That’s job number one. Two, if something’s going down and you’re long market makers don’t want to own stocks that are going down, they don’t. They would much rather match you with someone else. They have to have inventory. That’s part of the deal about being a market maker, but they don’t want to be heavily long in their own book, in their principal account, which is what that is, right? They’re trading with firm capital at that point, so don’t worry about the boogeyman or something that doesn’t exist. Your protective stops are going to serve you in so many great ways and alleviate you of duress. Just let the market action play out. The market will tell you when the move is over at the end of the day.
But again, just to close this thing out, I would definitely say if you’re going to use some volatility measurement, whether it’s ATR or standard deviation, then set the alerts on your phone or what have you. When you get the alert, go back in. Change your protective stop, and if you’re using structure, that’s something that you could do after the close and prepare your order and adjust your order and then enter it again the next session. Appreciate all the comments about this kind of stuff, but really it’s really that easy. At the end of the day, you’re just adjusting a book of stop orders, and that becomes easy stuff to manage. You don’t have to look at the screen. The market’s going to go where it’s going to go regardless of whether you’re looking at it or not, and I don’t particularly find that entertaining, so I don’t really do it.
I don’t feel bad about losing money, and I don’t get overly excited about making money. I just take it all in stride and manage my stop orders. That’s the best that you can do. Remember we talked about control the controllables. That’s all I can do. Powerless over the outcome of anything. Trading is probabilistic. The sooner you get used to that, the sooner you get used to sitting on your hands, the more money you’re going to make. That’s the way it worked for me and about a million of the other people that I know who were at my level. Anyway, it’s good to be back and I’ll see you tomorrow, Wednesday. I’ll be here with the G-Man himself, ganja. All right, have a good one.

Ganja:
Hi guys. Welcome back to another episode where Mike and I go over your guys’ topics, comments and questions. Today, we have a great topic. Before we get into that, I wanted to say thank you guys so much for all the support. We really appreciate it. Make sure you guys like and subscribe, all comments, help the algorithm. And with that we can get into today’s topic, which is actually an email, and I’m going to go towards the end of it here, and it says, in this regard, I was wondering how you reconcile these aspects with the fact that every time one wins money, there is a counterpart that does actually lose it. Does this create any contrast with the ethics and integrity you preach as essential aspects of trading and for which I could not agree more? It’d be great if you could share your point of view on this. What do you got for me? Mike

Michael:
Reminds me of that Brad Pitt line from the big short.

Ganja:
Does it

Michael:
You just saying it? How’s it go again? Yeah, yeah.

Ganja:
In the movie, the Big Short, the two smaller hedge fund guys, they were talking about how excited they were. They shortened the market. They won, they made a ton of money and they were cheering and screaming, and Brad Pitt’s character was like, shut up. Like don’t cheer today because families are going to suffer and people lost a lot of money. It was funny, as I was reading it, I brought it up. I was like, this is crazy. I was literally just thinking about that the other day.

Michael:
Yeah, I mean there’s a lot of ways to look at this from depending on how a person orients to the world, there are people who are hyper political and they feel trading is evil and that there’s no real skill that’s very self-serving. Then there’s folks who run money for big pensions and endowments and nonprofits for special interests. And so you have to take the thick with the thin and figure out what everyone’s motivation is. I think there’s a difference between seeking abundance and absolute greed for sure. I kind of remember that scene. I don’t remember what they were trading in the scene though, to make that windfall.
I’ve only seen the movie maybe once, maybe twice, but I’m just reading the email here. So the things that this comes in from Stefano, thanks for the email, Stefano, the paragraph before what Ganja read says, you often mention that one needs to find what makes them tick emotionally, spiritually, and psychologically. You could put in intellectually and physically there, and he’s kind of putting them all together. And so now it might seem like he’s wrestling with the fact that in order for you to make that money is coming from someone else’s account. So just on a street smart kind of way of looking at it, I just figure people are smart generally, and they’ve put a lot of time into knowing whether or not trading is appropriate for them. They’re constantly being told by any number of people, including myself, only risk money that you can afford to lose.
And when they say that, that means to me that means don’t lose money. That would be adverse, that would, if you lost the money, it would adversely affect your life. You need to have your running money, you need to have your bills paid. You need to have a certain level of lifestyle. Then after all that’s met, if there’s extra cash that you want to take from savings and start to endow a trading account, you’re going to win some. You’re going to lose some. In my experience, no one’s really been forced at gunpoint to open up a trading account and they’re ready, willing and able to have to risk capital in order to make it. Now, the trickier part is to understand that when you put on a trade, you really don’t know who on who’s on the other side of the trade. It could be a hedger, it could be an investor, it could be a speculator, and two, you don’t really know what timeframe they’re looking at because they could be short-term day players.
They could be longer term or intermediate players or they could be longer term trend followers, position traders, investors even. So even though they might have an unrealized gain in their account, you could find someone to offset the position on for a gain, and they might still be by virtue of the fact that whatever your R is, even your three R still might not even be one 10th of there are when you think about it. So we can’t say for sure that someone is absolutely getting smashed just because you’re making money when they’re in a trade because the person that you bought the thing from or sold it short to isn’t necessarily going to be the same person that you’re offsetting the trade on. You know what I mean? Yeah, yeah, no. So there’s always newer people coming into the market. So if I bought natural gas from someone who sold it, there might be another person coming into the market that’s going to buy it from me when it comes time for me to sell, whether I’m selling it at a loss or whether I’m selling it on a gain.
So I don’t think there’s a moral argument here as it’s part of the free economy and it’s a way for people to bring financial abundance to them. What I would caution people, everybody is again, trade small. That’s small, lose small bits of capital, especially when you’re starting out because you could find yourself in a bad situation very, very quickly. But I always wish everyone the best, even the people that are trading against me and that they all have financial abundance. I take any pleasure in seeing anybody lose. When I do see the bigger blowups, I know that especially at the pro level, you’re dealing typically with ego in many ways. Folks that know better but didn’t take the trade off. And to me, that’s a breach of fiduciary responsibility, especially if you’re running other people’s money, you owe it to them to keep the losses small, but in those environments, you’re kind of encouraged to bet very big, especially if it’s other people’s money.
I don’t feel any conflict in my own body in doing this. I feel you can be spiritual and still wish everyone the best. It would probably help if we knew who the counterparties were on all the trades, but you don’t. They’re deliberately anonymous from you. So I think you can still hope for everyone else’s financial abundance on their own terms, in their own timeframe. All you can do is manage risk in the ever evolving moment of right now. So if you get hung up on the moral stuff, it’s probably not probably a good fit for you. But here in my house we’re capitalists and I’m not doing anything illegal or unlawful. I’m not cheating. It’s simple risk management. That’s really all it is. So I don’t really myself have any problems with it. What do you think?

Ganja:
I think that the only real ethical or moral argument to be made is only for people who are cheating. I think that otherwise you go into trading understanding that there is a chance that you’re not going to win, and it’s probably not small if you’re just starting out. If you don’t know what you’re doing, there’s probably more of a chance that you’re going to lose. So I think if you kind of stick to the core tenets of what you just said of don’t risk more than you’re willing to lose and obviously don’t cheat. Cheating’s not good ever, and just take your time, start small. I don’t really think there’s a moral argument to be made. I mean, if that’s the case, obviously they’re very different, and I’m not trying to draw a comparison, but then you should go around to every seven 11 and stop people from buying $3 lottery tickets.
It’s a similar concept, but obviously one is gambling and they’re quite different. But yeah, it’s like only risk what you’re willing to lose. And I think once you do that, then there’s no argument to be made. And sure, I get that somebody could be struggling or could have a form of gambling addiction, and then they also transfer that onto trading, but that’s unfortunate and that person should definitely get help. But that’s a completely different thing. You can’t treat the whole market like that. You just said it could be a big fund, it could be like a hedge fund, and it’s in their own timeframe. You don’t know what they’re losing or what their timeframe is,

Michael:
Right? Yeah. It’s important to understand too, when you’re starting out, you’re really running your money, but then when you get older and you go pro and you start running other people’s money, you’re serving a bigger purpose. You know what I’m saying? I’m impacting people who I’ll never meet for the good. Not that I’m not meeting them for the good, but handling their money. They’re going to get financial benefits. Some of these organizations are going to be able to go on for years and years and years beyond what their wildest dreams were because I was able to make them money and they go out and serve charitable cause or what have you. That makes me feel good. But again, it can be political. I think morals or ethics, I’m not doing anything that’s outside. I have impeccable compliance history.
Amateurs might say that you don’t create any value, but they obviously don’t understand how the markets work. They don’t understand how much math and science actually goes into it, and how much emotional integrity that you have to have when you manage risk because it’s really not about me. I’m trying to serve a bigger purpose here, so I don’t look at it or take it personally. It’s not like I’m getting beat. It’s like I’m standing century. I’m safeguarding people’s capital. Even in the commodity space, there’s no better person to do it than me. I’m not going to let them get taken advantage of. I’m not going to fall victim to stupid fads. I’m not going to get sucked into the memification, if you will, of certain names or certain trades. I’m a protector. I’m Michael Lee Archangel, and so who better than me? You see? And so I can see it on both sides, but as long as people have money and as long as individuals that I work with or for my job is to help them achieve their goals, that’s the primacy of my planning is to help them achieve their goals.
If other fiduciaries don’t have my sense of discipline, then it’s up to them to have to meet the standard as far as I can see it just in competition, you join a game, someone’s going to win, someone’s going to lose. You want to try to keep your losses small, especially if you don’t have a lot of money, which again is part of the paradox of trading is like you have to be in it. But if you’re thinking that you don’t deserve, if your politics are so messed up that you don’t think people have the right to earn money or to make gains, it would be impossible to take out your credit card or any cash and buy anything. Everything is going to be marked up for a profit margin, right? Salaries have to get paid. That comes from people spending money. You can’t think about being a victim every step of the way. That’s kind of how the world works. Even in government stuff, that money comes from taxes. So you trace the money, where’s the tax coming from? Well, it’s got to come from your AGI. It’s got to come from revenues. All the money’s got to come from somewhere. So there’s probably a few angles that you could look at this. I don’t have all the answers. I can only answer for myself.
I don’t know what the contrast with the ethics part would mean though, really. As compared to what though?

Ganja:
I think it was like, oh, if you do see it as a bad thing somebody losing, then how does that contrast with the ethical code that you set and that you have, if at all?

Michael:
Yeah, I mean, so my ethical code is do unto others, be a Christian about it. And so I just figure whoever’s coming to the marketplace, to me, okay, this is a really good question. It adds a different dimension and you think about it that way. I look at the market as a professional place. It’s a place where professionals meet. So if amateurs or newbies want to come in, and I was a newbie once, I don’t use that term in a condescending wake, which means to talk down to people,

Ganja:
Never judge

Michael:
Costanza stanza. It’s a professional environment, and that means the people who want to participate, there’s a certain level of stance. You go to Disneyland, you see Mickey standing there with the finger. You got to be this tall to go on the ride, and if you can’t meet Mickey’s finger can’t play. So that’s the way I actually look at the market, which is probably helps people understand why. Sometimes you might hear me speak as if I’m trying to discourage you, and in some ways I am. It’s because the level of competition is high. It’s an all-star league, if you will, and you can jump in as an amateur, but you have to understand everything that goes with it is you’re coming in used to playing a pickup game of basketball in a parking lot in your neighborhood, and you’re going against the dream team because that’s who’s out there.
So if you want to try to test your wares and go for it, I don’t, I’m never going to be a dream killer, but I’m going to be very practical and explain to you the reality of what’s out there. There are people who are just so skilled at this, who have a good feel, who have money, who have technology who’ve taken their beatings and are at the top. Forget having won Michael Jordan, you got 1200 of them on any given day coming against you, maybe more. And so if you go into that type of environment expecting to beat Michael or Kobe rest his soul in a game of horse or a game of 21, you have nothing to lose by trying, but be practical, be realistic. And so to me, if that person shows up at my house where the pros are, it’s not like it’s Augusta National where it’s members only, but you’re playing in a game against competition that has you far outmatched before you even know your ass from a hole in the ground before you even know what you’re doing. So to me, when you do that and you engage in the market anyway, your losses are on you at that point. You see? Yeah, I even know now as a 35 years of experience, I live in a paradigm of personal responsibility and if I lose money, it’s on me. There’s no one to blame.
Who are you going to blame if I’m acting intentionally?
So I think the question kind of begs, do you feel bad from the losers victims? I don’t think they’re victims at all. I think they’re people who consciously decided to open up a margin account or some type of equity trading account and they decided to have a go for it to them. Maybe they’re winging it, maybe it’s disposable income. It might not be their kids section 5 29 college savings plans. It might not be their 4 0 1 K plans. Again, when I say to people, you need to understand if this is appropriate for you, that’s kind of what I’m getting at money. It’s hard enough to get the grub steak in the first place. Is there a better thing that you can be doing? Could you buy section eight housing, for example, and earn rental income? Could you buy and sell wine? Could you do something that might put you in a higher chance of winning

Ganja:
In competition? That’s not for everybody. I think that’s one of the things I think this question is really, or the answer to the question is you really have to, it’s like what are your expectations in the market in the first place? What do you want? And I think that would kind of answer most of that. But one thing I wanted to mention is you talked about how they’re not victims, the people starting out or not victims. I’ve kind of believed that too because it’s like when I started cycling and I got put on the varsity team, I was the youngest guy on the varsity team, and it’s obviously a little different because in trading there’s more anonymity involved. But when I got on the team, I was fresh meet all the varsity guys wanted to not necessarily put me through the ringer, but they were happy they had a new playmate. They were like, oh, great, we got some more competition, someone else who can push me further. So to them it was exciting. And I remember one of the first practices we were working on, it’s kind of like a game of chicken. How close can you get to another person’s handlebars while you’re going through a corner together,

Michael:
Pull your elbow in the cheekbone and knock ’em off?

Ganja:
Well, and that happens. That happened to me in a race, but that’s what they were preparing for. That’s what I

Michael:
Would do.

Ganja:
So these guys were preparing me for that. You

Michael:
Pushed old ladies down the stairs.

Ganja:
Well, if you call an 18 year old kid, an old lady, then yeah,

Michael:
No, I’m just saying it’s the same mindset, right?

Ganja:
Right. It is. But anyway, so in this drill, my teammates started giving me a little bit more elbow one even actually pushed me to see if I’d fall over. And it’s like they were just testing me. Ultimately, they wanted the best for me, and they actually didn’t really think maliciously at all, but they were testing me. And I wasn’t a victim by any means. It was my personal choice to continue going that direction.

Michael:
It’s totally on you to be there. And so that’s why I don’t, again, I don’t know that where the angle, if it’s just a straight up comparison of what I’ve preached and try to be spiritual and loving and all abundant, I think it’s possible, again, for everybody to win, you do have to have extreme amounts of discipline. You do need to keep a good attitude, especially when you’re losing money, when you can go on tilt and do bad things and lose a lot more than you necessarily wanted to. But let’s be clear, if people come into the marketplace, and I generally think they’re warned 18 times to Sunday that you can lose money for things, even in the risk disclosure document, you list all the different ways people can lose money, then at the end you say, this document can’t possibly delineate all the ways you can lose money. So to me, at that point, even if the client gives you money and they lose, you’ve effectively tried to talk them out of giving you money in the first place. So if they go forward with that and you lose, right? Losing isn’t forever. Draw downs are part of the business. So I mean, what are we talking about? Do I feel victimized or am I going to claw my way back?
So it’s a simple question, but it’s also kind of sophisticated. I think you could answer it politically. You could answer it from a cultural standpoint. There’s certainly a spiritual aspect of it. There’s a capital way to answer the question, and I’ve touched on a few of them, but I don’t feel guilt for winning because I don’t sit around clicking my heels. I just think, this is who I am, this is what I do, this is my nature. Make money for people in the markets. And so someone’s got to do it because how else are they going to afford retirement? How else are the endowments or the foundations going to exist? Because these people, on a 5,000 year plan, these are entities that outlive the people who funded the accounts. In most instances, they were the grantors at the beginning, but then after they have to turn it over to other people, trustees and directors who have a lot of fiduciary responsibility, and I’m there to help them. So that’s my bigger purpose in this.

Ganja:
And one thing to add to that is no human should ever win 100% of the time all of the time ever. Because nobody, first of all, you can’t, it’s not physically possible. Not everyone can get first place. And also if you’re winning all the time, then you don’t appreciate it as much. There has to be some level of drawdown in anything in order to fully appreciate what you have and to not be greedy with it. Yeah.

Michael:
Yeah. I mean, I don’t think it’s practical to, I think that you’re going to win all the time. There’s a huge charitable component also to what I do in terms of who I work for, what I do for free, how much money I give away, how much volunteering that I do. So personally, I feel like I have a good balance of giving back in many ways, giving of my time, giving of my effort, giving of my money. And so I’m comfortable with that right now. It’s something that I look at all the time. I tend to be generous as a fault as it goes, but I don’t think you should wrestle with that. If Stefano is wrestling with this, I don’t think he should in as much, that people have every opportunity to not put their money in the market. And so if they lose, they’re not victims by any stretch.
They’re not a victim of circumstance. They’re not a victim of anything. They’re giving it their shot, they’re shooting their shot, and it’s really incumbent upon them to understand what they’re getting involved with. And that, especially at the beginning, I think they’re outmatched, they’re outgunned, they’re out ability. There’s a million things that are going against them. Unfortunately, there’s only one way to learn it, and that’s to be in it. So more to follow, but that’s really all I have to say about it based on my unique experience and the environment that I’m in now and what my thoughts are.

Ganja:
Yeah. No, I think that’s a good place to wrap up today too. I hope we answered the question. I think we did pretty well. With that said, make sure you guys like and subscribe. I’ll comments, help the algorithm. We really appreciate the support. Oh yeah. And I will see you guys in the next one.

Michael:
Take care. Okay, everybody, thanks for being here. Please take a minute like and subscribe to the show. You could also leave a comment. I don’t have all the answers, so it’s good to get some feedback. Also, if you would like to support the show, check out the links below. You can get the free audio book of the Inner Voice of Trading, and also information about the course that I teach with Victorio. Thanks for being here, folks. I’ll see you tomorrow.

Hey everybody, it’s Michael Martin. Hope you’re doing well. It’s Thanksgiving week here in America, so we’re going to be off on Thursday and Friday, so I’ll have episode today, obviously tomorrow, and then Wednesday I’ll be on with ganja. Thursday, Friday will be off. Then we’ll see you a week from today. Thanks for being here. Hope you’re doing well. Hope you’re reviewing your performance for 23, and it’s been choppy for sure. There’s been moments of no follow through, so I wouldn’t beat yourself up unless of course you like the feelings of beating yourself up and getting attention from everybody, then by all means do it, but be the best at it. If you’re going to beat yourself up, then go Mike Tyson on your ass, beat the living shit out of yourselves because that’s probably feeling good. I myself didn’t find I could get better doing that to myself, so I kind of stopped and just said, more will be revealed.
That’s kind of how I approach each day. Sometimes the information that you need or the solution that you want isn’t there, and so more will be revealed, and that requires you to have patience. A lot of folks don’t like to have patience. They don’t like having to be patient, so I want you to, for homework, you can investigate what are the feelings that you feel when you have to be patient because that ties into trading and it’s a huge, to me, it’s one of the three crown emotional crown jewels of trading is knowing that if your setup isn’t there, then you have to sit on your hands, the pro move as opposed to uptime or downtime or trying to find, again, 14 strategies to apply on one instrument. To me, that’s to desperation and it’s a coping mechanism. To me, it’s much better if you are much more promiscuous in your thought process and then extend your universe of instruments.
This might sound weird, but I think the worst thing that happened to retail traders is the micro and the mini ization of index futures. It certainly was good for the exchange, and it’s certainly good for pros because they can kind of feed on everybody, but I don’t know that it’s really served the public because just given them access to something doesn’t mean it’s in their best interest. And most of the folks who are struggling or who have failed and have written me, were in fact trade. I don’t even know what the tickers are. What is it? MEQ, and right then there’s the ein, and what they try to do is no matter what, because their accounts are too small, they spend all day trying to find an edge as opposed to developing an edge that they can deploy across many, many instruments. And so what ends up happening, and the point of the story today is to turn you into, give you a vibration of abundance.
Whenever I was struggling, I would always just say, you know what? I don’t accept this bullshit and I’m going to go focus on what it is to be great, and I didn’t know what that was, but along the lines of fake it till you make it and act as if that type of energy, even if it is momentarily bravado or machismo, it’s far more superior than to sit back and get a case of the poor me and why does this always happen to me? I believe words have power, and if that’s what you say to yourself, why does this always happen to me? What do you think is going to happen? You’re going to keep putting yourself in situations where you keep saying that. Why does this always happen to me?
There are trends everywhere. There’s emotional trends, right? That’s what the trend following folks don’t fully understand is that everyone’s running an emotional system. Even Bill Dunn, who’s now retired, spoke with me and talked about having emotions running through his body. The ability he had though, which was separate from his system, it was a personal character characteristic. A personal trait was to not let his emotions overcome his better judgment. But that’s something that’s true in life that you need to work on, not just if you’re going to work on trying to design mechanized trading rules, whether they be swing trading or high frequency trading or buying open and close kind of things in the market or trend following, it doesn’t matter to me. There’s no one way to design a system. There’s many systems. We have ’em all. So instead of thinking of being in the vibration of, I need to make enough in the marketplace, again, I think if that’s your mindset, that’s where you’re going to end up.
You’re going to make enough, but what is enough, right? This is where we get into what is your self-worth? Where’s your self-esteem at? I can assure you the folks I knew from commodities corporation had the self-esteem that they thought they were entitled to all of it. There was no such thing as enough. Enough is, again, it’s a coping mechanism where you feel like, well, I’ve got a piecemeal my way to success, and that’s not how my mind works. Once it clicked for me, I realized the world was mine, and from a trading standpoint, it was my kingdom. I was the king, so I had to set what the parameters were. It wasn’t kind of coming to the market with hat and hands out saying, this is what I would please, if you have any extra spare change, I’ll just take those small gains and I won’t make any big deal about it and be humble. I think you can seek abundance, which is different from greed

And have a very strong sense of self-esteem and demand from the world, the biggest gains possible. And so the whole thing is can you live with the uncertainty? So in my notes here, I have vibration of making enough rather than what you really want, and then learning to live with the uncertainty. So how can you do this because it doesn’t make sense to just blather something like that out there and not give you a, for instance, let’s just say that you have X amount of corpus in your account assets under management. I call it corpus. You can call it what you want. You’re going to risk one half of 1%. Don’t think in terms of dollars because you’ll always look at that number and be like, oh my God, my boyfriend or girlfriend is making 60 k. I just made 5,000 in the market on my million.
Now I’m going to call them up and say, I just basically made your month’s salary pre-tax, pre deduction in one trade. So when you look at it that way, contextually, you could be like, yeah, I suppose that’s a lot of money, but if you trading a million dollars and you just made five K, you’re up one half of 1%. It’s not really anything to write home about, certainly nothing to pick up the phone and start bragging about. So when you think about it in terms of percentages, it’s much more contextual to me. You might benefit from that. So let’s say that that’s what your R is. Your R is one half of 1%. So how do you stay in the winners and invite that abundance in? Because it’s all behavioral. The trades are there. The question is, are you going to participate in them so you can make that choice?
And it’s not that random. You can make that deliberate behavior. So if look at it this way, this is one way to do it. There’s probably others. This is just to give you context so that you understand where I’m coming from. Like I’ve said a million times, I don’t have all the answers. Yes I do. No, I don’t have all the answers. I know what I’ve lived through and I’m going to share with you experientially or what I went through from my own experience. I guess that’s the better way to say it. So you put on a trade and you have whatever, the number would be one half of 1%. So now the account goes up and that’s your R and you’re at the three R, right? That seems to be popular three to one. So you’re at three R unrealized gains though one way that you can invite greater gains, tactically speaking and still stay abundant, is if you are willing to risk one R on your original account balance in order to be in the trade, what’s the difference?
If you’re at three R and you’re still risking one R one half of 1%, so you put your stop in at two R, what is the difference? What changes? Because you go from trading your cash balance, say with no other positions and no unrealized gains, you just have cash or money market funds, and you risk one half of 1%. Then you find yourself from good luck, good timing or good analysis could be any combination of them. We’ll take ’em all. You’re up three R on the trade. So in that moment of time, if you looked at the trade and said, okay, if I was coming into finding another trade, those unrealized gains would be part of my account balance. My R would still be one half of 1%, it would be incrementally smaller. I’ve got my protective stop in. What’s the difference? What does that do to you when you have unrealized gains?
Because I think from the emails I get you panic, and I’m like, why would you panic when you’re in one of the most abundant states that you could be in when you’re a trader? What’s the point of panicking? Because when you panic, I believe I’m not a scientist, but psychologically, I think your fight or flight mechanism kicks in and then you induce a trade, which feels good in the moment because you relieve the emotional pressure, but financially you just cut your big toe off. Let’s leave it at that. So now you’re off balance. That’s why we have toes, right? Big pappy’s got big toes. So what I would do is to think and meditate on that and say, okay, maybe Mike has a point here. Why do I panic when I have unrealized gains? I have got my protective stop at two R. Worst case scenario is still going to get knocked out, making money, take it home overnight, take it home over the weekend, of course, and adjust my stop higher.
A handful of times it’ll definitely go up to four R, five R, maybe six R, in which case you’ll always get stopped at say three, four or five R respectively, and then you get used to that. That’s how you become comfortable when you’re uncomfortable is to put that R into perspective. Why is it different when you have your initial account balance and the corpus, whatever you trade in futures? I think you’re dealing with cash. There’s no money market, but what is the difference? Why would you look at those differently? If it’s the same R, why would you need to take it? What’s the fear that it’s going to go away? Where does that come from? Show me the science, because I think you’ve made it up in your brain. I don’t think you have the numbers to be frank, and I say that I know I sound like a big jerk, and I don’t mean to, but I know the numbers.
And so if your goal here is to exact as much cash as you possibly can and not just make a living or make enough, making enough satisfies and emotional need because it’s all relative to your situation. So you have to supplant yourself and say, I’m sitting, I got George Sotos here and I got Dren Miller here. How am I going to feel about taking my big one half or 1% winner? Sure, right? If it’s your first month of trading, you have to go through that. But very quickly you need to realize that this is an industry where since you’re responsible for everything that you do and you’re responsible for everything that happens in your account, good or bad, you get to design it and architect it exactly the way you want. It might be the only reason, not the only reason, but it’s certainly a good reason of why you might even be listening or watching the show is because I dreamed those bigger dreams.
It was a mindset issue. The tactical part’s not terribly difficult. In fact, it’s the same. You add length to your portfolio, you put in your protective stop market goes up, you adjust your protective stop, so you cancel and replace. Okay, maybe that’s slightly different, but it’s all about babysitting a wishlist of stop orders. Here’s where I’m going to enter the market long. So I have those buy stops, not limits. I have buy stops above the market to add length at appropriate levels as soon as I get filled on any of those, and nowadays it’s so easy, you get filled, you can get a text message. I still get phone calls, but man, the technology, it makes it so much easier. So then when we have some time over this, the reason why I’m speaking about this is because there’s probably some slow times you’ll have Black Friday and Cyber Monday.
Don’t put more thought into holiday shopping than you do for your trading models because you deserve it. In my paradigm, if you’re willing to do the work, you might as well get paid and you might as well get paid as much as you possibly can for the risk that you’re willing to take. And that to me is a simple, simple exercise that can help you improve your trading by, I don’t even know. I know people write in, they say they’ve doubled their gains just by sitting on their hands, but you have to get used to feeling the feelings of uncertainty, dealing with the probabilistic outcomes of a trade, and then realizing that in the event that you put in a trade and the rare times it works against you in such a way that it goes to break even. Don’t be a bitch. It’s not the end of the world if you do thousands and thousands of trades. That’s going to happen, but it’s, it’s not worth forsaking all the gains on all the other trades that you make by sitting on your hands and taking them home overnight, taking them home over the weekend and adjusting your stop higher accordingly.
You see, it’s not worth it. So you’re making a mountain out of a mole hill and you’re afraid of a boogeyman that I can think of maybe three times over the last decade that that happened. And you’re like, oh, well, it’s just the way it goes. If you do enough trades, you got to understand that at least one thing that’s bad is going to happen to you. I was locked in live. It moves against me. It’s the way it goes. Doesn’t happen too frequently. And to be honest, it hasn’t happened since the instance I wrote about in the book. I think it was Mad Cow as I was in cattle and mad cow hit the tape. So it’s very rare, and I’m telling you, bigger gains in your portfolio are all about mindset. You need to invite them. You need to feel comfortable living with the uncertainty.
I’m going to talk about the three crown jewels. I just don’t feel like getting into it now because it’s a longer video and it requires examples, and I just don’t want to do a two hour video right now. I want to do tomorrow’s episode as soon as I hang up here so that I can be done for the week because I’m busy. Otherwise, I appreciate everybody being here. I see all the comments. I appreciate you all writing, and what I just explained was exactly how I learned to get comfortable with the feelings of being uncomfortable with the unpredictability of trading and the uncertainty or the fact that you’re dealing with I need to be accurate, and I love that feeling, but trading is probabilistic and I needed to make, I didn’t have a choice. I really couldn’t get by making small gains, so that was kind of a happy accident as the artist, late artist Bob Ross would say, there are no mistakes. There are only happy accidents. Anyway, I appreciate you being here. I hope you have fun plans set up for Thanksgiving later this week, and I’ll be back again tomorrow in a few minutes. You.

Hey everybody, it’s Michael Martin. Hope you’re doing well. It’s Thanksgiving week here in America, so we’re going to be off on Thursday and Friday, so I’ll have episode today, obviously tomorrow, and then Wednesday I’ll be on with ganja. Thursday, Friday will be off. Then we’ll see you a week from today. Thanks for being here. Hope you’re doing well. Hope you’re reviewing your performance for 23, and it’s been choppy for sure. There’s been moments of no follow through, so I wouldn’t beat yourself up unless of course you like the feelings of beating yourself up and getting attention from everybody, then by all means do it, but be the best at it. If you’re going to beat yourself up, then go Mike Tyson on your ass, beat the living shit out of yourselves because that’s probably feeling good. I myself didn’t find I could get better doing that to myself, so I kind of stopped and just said, more will be revealed.
That’s kind of how I approach each day. Sometimes the information that you need or the solution that you want isn’t there, and so more will be revealed, and that requires you to have patience. A lot of folks don’t like to have patience. They don’t like having to be patient, so I want you to, for homework, you can investigate what are the feelings that you feel when you have to be patient because that ties into trading and it’s a huge, to me, it’s one of the three crown emotional crown jewels of trading is knowing that if your setup isn’t there, then you have to sit on your hands, the pro move as opposed to uptime or downtime or trying to find, again, 14 strategies to apply on one instrument. To me, that’s to desperation and it’s a coping mechanism. To me, it’s much better if you are much more promiscuous in your thought process and then extend your universe of instruments.
This might sound weird, but I think the worst thing that happened to retail traders is the micro and the mini ization of index futures. It certainly was good for the exchange, and it’s certainly good for pros because they can kind of feed on everybody, but I don’t know that it’s really served the public because just given them access to something doesn’t mean it’s in their best interest. And most of the folks who are struggling or who have failed and have written me, were in fact trade. I don’t even know what the tickers are. What is it? MEQ, and right then there’s the ein, and what they try to do is no matter what, because their accounts are too small, they spend all day trying to find an edge as opposed to developing an edge that they can deploy across many, many instruments. And so what ends up happening, and the point of the story today is to turn you into, give you a vibration of abundance.
Whenever I was struggling, I would always just say, you know what? I don’t accept this bullshit and I’m going to go focus on what it is to be great, and I didn’t know what that was, but along the lines of fake it till you make it and act as if that type of energy, even if it is momentarily bravado or machismo, it’s far more superior than to sit back and get a case of the poor me and why does this always happen to me? I believe words have power, and if that’s what you say to yourself, why does this always happen to me? What do you think is going to happen? You’re going to keep putting yourself in situations where you keep saying that. Why does this always happen to me?
There are trends everywhere. There’s emotional trends, right? That’s what the trend following folks don’t fully understand is that everyone’s running an emotional system. Even Bill Dunn, who’s now retired, spoke with me and talked about having emotions running through his body. The ability he had though, which was separate from his system, it was a personal character characteristic. A personal trait was to not let his emotions overcome his better judgment. But that’s something that’s true in life that you need to work on, not just if you’re going to work on trying to design mechanized trading rules, whether they be swing trading or high frequency trading or buying open and close kind of things in the market or trend following, it doesn’t matter to me. There’s no one way to design a system. There’s many systems. We have ’em all. So instead of thinking of being in the vibration of, I need to make enough in the marketplace, again, I think if that’s your mindset, that’s where you’re going to end up.
You’re going to make enough, but what is enough, right? This is where we get into what is your self-worth? Where’s your self-esteem at? I can assure you the folks I knew from commodities corporation had the self-esteem that they thought they were entitled to all of it. There was no such thing as enough. Enough is, again, it’s a coping mechanism where you feel like, well, I’ve got a piecemeal my way to success, and that’s not how my mind works. Once it clicked for me, I realized the world was mine, and from a trading standpoint, it was my kingdom. I was the king, so I had to set what the parameters were. It wasn’t kind of coming to the market with hat and hands out saying, this is what I would please, if you have any extra spare change, I’ll just take those small gains and I won’t make any big deal about it and be humble. I think you can seek abundance, which is different from greed

And have a very strong sense of self-esteem and demand from the world, the biggest gains possible. And so the whole thing is can you live with the uncertainty? So in my notes here, I have vibration of making enough rather than what you really want, and then learning to live with the uncertainty. So how can you do this because it doesn’t make sense to just blather something like that out there and not give you a, for instance, let’s just say that you have X amount of corpus in your account assets under management. I call it corpus. You can call it what you want. You’re going to risk one half of 1%. Don’t think in terms of dollars because you’ll always look at that number and be like, oh my God, my boyfriend or girlfriend is making 60 k. I just made 5,000 in the market on my million.
Now I’m going to call them up and say, I just basically made your month’s salary pre-tax, pre deduction in one trade. So when you look at it that way, contextually, you could be like, yeah, I suppose that’s a lot of money, but if you trading a million dollars and you just made five K, you’re up one half of 1%. It’s not really anything to write home about, certainly nothing to pick up the phone and start bragging about. So when you think about it in terms of percentages, it’s much more contextual to me. You might benefit from that. So let’s say that that’s what your R is. Your R is one half of 1%. So how do you stay in the winners and invite that abundance in? Because it’s all behavioral. The trades are there. The question is, are you going to participate in them so you can make that choice?
And it’s not that random. You can make that deliberate behavior. So if look at it this way, this is one way to do it. There’s probably others. This is just to give you context so that you understand where I’m coming from. Like I’ve said a million times, I don’t have all the answers. Yes I do. No, I don’t have all the answers. I know what I’ve lived through and I’m going to share with you experientially or what I went through from my own experience. I guess that’s the better way to say it. So you put on a trade and you have whatever, the number would be one half of 1%. So now the account goes up and that’s your R and you’re at the three R, right? That seems to be popular three to one. So you’re at three R unrealized gains though one way that you can invite greater gains, tactically speaking and still stay abundant, is if you are willing to risk one R on your original account balance in order to be in the trade, what’s the difference?
If you’re at three R and you’re still risking one R one half of 1%, so you put your stop in at two R, what is the difference? What changes? Because you go from trading your cash balance, say with no other positions and no unrealized gains, you just have cash or money market funds, and you risk one half of 1%. Then you find yourself from good luck, good timing or good analysis could be any combination of them. We’ll take ’em all. You’re up three R on the trade. So in that moment of time, if you looked at the trade and said, okay, if I was coming into finding another trade, those unrealized gains would be part of my account balance. My R would still be one half of 1%, it would be incrementally smaller. I’ve got my protective stop in. What’s the difference? What does that do to you when you have unrealized gains?
Because I think from the emails I get you panic, and I’m like, why would you panic when you’re in one of the most abundant states that you could be in when you’re a trader? What’s the point of panicking? Because when you panic, I believe I’m not a scientist, but psychologically, I think your fight or flight mechanism kicks in and then you induce a trade, which feels good in the moment because you relieve the emotional pressure, but financially you just cut your big toe off. Let’s leave it at that. So now you’re off balance. That’s why we have toes, right? Big pappy’s got big toes. So what I would do is to think and meditate on that and say, okay, maybe Mike has a point here. Why do I panic when I have unrealized gains? I have got my protective stop at two R. Worst case scenario is still going to get knocked out, making money, take it home overnight, take it home over the weekend, of course, and adjust my stop higher.
A handful of times it’ll definitely go up to four R, five R, maybe six R, in which case you’ll always get stopped at say three, four or five R respectively, and then you get used to that. That’s how you become comfortable when you’re uncomfortable is to put that R into perspective. Why is it different when you have your initial account balance and the corpus, whatever you trade in futures? I think you’re dealing with cash. There’s no money market, but what is the difference? Why would you look at those differently? If it’s the same R, why would you need to take it? What’s the fear that it’s going to go away? Where does that come from? Show me the science, because I think you’ve made it up in your brain. I don’t think you have the numbers to be frank, and I say that I know I sound like a big jerk, and I don’t mean to, but I know the numbers.
And so if your goal here is to exact as much cash as you possibly can and not just make a living or make enough, making enough satisfies and emotional need because it’s all relative to your situation. So you have to supplant yourself and say, I’m sitting, I got George Sotos here and I got Dren Miller here. How am I going to feel about taking my big one half or 1% winner? Sure, right? If it’s your first month of trading, you have to go through that. But very quickly you need to realize that this is an industry where since you’re responsible for everything that you do and you’re responsible for everything that happens in your account, good or bad, you get to design it and architect it exactly the way you want. It might be the only reason, not the only reason, but it’s certainly a good reason of why you might even be listening or watching the show is because I dreamed those bigger dreams.
It was a mindset issue. The tactical part’s not terribly difficult. In fact, it’s the same. You add length to your portfolio, you put in your protective stop market goes up, you adjust your protective stop, so you cancel and replace. Okay, maybe that’s slightly different, but it’s all about babysitting a wishlist of stop orders. Here’s where I’m going to enter the market long. So I have those buy stops, not limits. I have buy stops above the market to add length at appropriate levels as soon as I get filled on any of those, and nowadays it’s so easy, you get filled, you can get a text message. I still get phone calls, but man, the technology, it makes it so much easier. So then when we have some time over this, the reason why I’m speaking about this is because there’s probably some slow times you’ll have Black Friday and Cyber Monday.
Don’t put more thought into holiday shopping than you do for your trading models because you deserve it. In my paradigm, if you’re willing to do the work, you might as well get paid and you might as well get paid as much as you possibly can for the risk that you’re willing to take. And that to me is a simple, simple exercise that can help you improve your trading by, I don’t even know. I know people write in, they say they’ve doubled their gains just by sitting on their hands, but you have to get used to feeling the feelings of uncertainty, dealing with the probabilistic outcomes of a trade, and then realizing that in the event that you put in a trade and the rare times it works against you in such a way that it goes to break even. Don’t be a bitch. It’s not the end of the world if you do thousands and thousands of trades. That’s going to happen, but it’s, it’s not worth forsaking all the gains on all the other trades that you make by sitting on your hands and taking them home overnight, taking them home over the weekend and adjusting your stop higher accordingly.
You see, it’s not worth it. So you’re making a mountain out of a mole hill and you’re afraid of a boogeyman that I can think of maybe three times over the last decade that that happened. And you’re like, oh, well, it’s just the way it goes. If you do enough trades, you got to understand that at least one thing that’s bad is going to happen to you. I was locked in live. It moves against me. It’s the way it goes. Doesn’t happen too frequently. And to be honest, it hasn’t happened since the instance I wrote about in the book. I think it was Mad Cow as I was in cattle and mad cow hit the tape. So it’s very rare, and I’m telling you, bigger gains in your portfolio are all about mindset. You need to invite them. You need to feel comfortable living with the uncertainty.
I’m going to talk about the three crown jewels. I just don’t feel like getting into it now because it’s a longer video and it requires examples, and I just don’t want to do a two hour video right now. I want to do tomorrow’s episode as soon as I hang up here so that I can be done for the week because I’m busy. Otherwise, I appreciate everybody being here. I see all the comments. I appreciate you all writing, and what I just explained was exactly how I learned to get comfortable with the feelings of being uncomfortable with the unpredictability of trading and the uncertainty or the fact that you’re dealing with I need to be accurate, and I love that feeling, but trading is probabilistic and I needed to make, I didn’t have a choice. I really couldn’t get by making small gains, so that was kind of a happy accident as the artist, late artist Bob Ross would say, there are no mistakes. There are only happy accidents. Anyway, I appreciate you being here. I hope you have fun plans set up for Thanksgiving later this week, and I’ll be back again tomorrow in a few minutes. You.