Succeed in trading by cutting your screen time

Hey everybody. It’s Michael Martin. So I got an email from someone who suggested I get clear or help them understand why I say you shouldn’t be sitting in front of the screen all day when you’re just starting. And the reason is, is because you don’t know anything and sitting in front of the screen, isn’t how you’re gonna learn. You’re only gonna learn by actually putting on the trade, sitting there, right. For who knows how long? I don’t want to say hours and hours, because I don’t really know. And sitting there might induce you to want to kind of sit there like a slot machine and pull the one arm bandit, when you don’t know what you’re doing. The last thing you want to do is try, try to feel any type of gravitational pull from the market itself as if you have to do something, right?

Another example, if you’re watching one minute bars, right. That data’s not material. So you can line it up. Of course, with like weekly or monthly highs, then it would mean something. But then it’s incidental because it’s the weekly or the monthly high that actually has the statistical significance. But what I don’t like hearing about is folks trying their hand thinking that somehow they’re more in control when they’re looking at things like in the lower timeframes, because that’s not the case. And I get the emails from people like all the time. I only read you the ones where I can kind of help people save themselves. But for a lot of folks, it’s too late. They bought into some marketing pitch that if you have 14 monitors and you’re sitting there with real time quotes, watching things in one minute bars, you can’t possibly lose.

And I’m sorry for that. We as an industry owe you better – you deserve more from us. We’re failing you. And we let that type of marketing happen. I try to call people out without starting fights. But the majority of what you see advertised is garbage. Now my other philosophy is this go to Martin Chronicle and look to sign up for a course to trick course. It’s a trick question. You can’t do it. It’s it’s unethical in my way of thinking to sell a person a how to trade course. Okay. If I don’t know who they are and what their makeup is because that’s, if you don’t know any of that information, how are you gonna know what type of trading system is gonna resonate with you emotionally and psychologically, that you can replicate day after day and hit your goals. Chances are, and I’m gonna say it this way. 97 out of a hundred people don’t have clear goals. And if they do have a goal, it’s probably like, I want to make a thousand dollars a day. I want to make X amount of dollars. That’s not a goal that’s like saying I want to lose 20 pounds as your new year’s resolution.

So maybe if you knew what the money was gonna do for you, and there was a magnetic pull that way. But nonetheless, I don’t want to get off subject. The idea here is that if you sit in front of the screen all day, without having a strategy, you could end up doing stupid things with your money. Now that’s different from what I do recommend, which is trading is your best teacher, but that’s something you would know, like over the weekend, what you’re gonna try to do Monday to gain the experience. Okay? Have that mapped out, open up your thing, put the trade on and then be done with it, steering and watching it. Isn’t gonna make it move in your direction, right? You purchase something long, put in your protective stop and that’s it. You can trust the market mechanisms gonna work for you. And if you’re so scared about losing money, there’s not a lot.

I can help you with there because you’re gonna have to try to figure out what level you are comfortable and willing to lose in order to get where you want to be. But the benefit of listening to this show is that I’m teaching you the stuff that the pros do and that they had to go through before they made it. And no one is exempt from going through this, not a soul one way or another. If you want to dance, you have to pay the Fiddler. And that’s the way that it works. And if you’re underfunded, I would sit and wait then and try to gather some funds and then trade. When it’s not gonna be such a psychological blow to you because you will lose money and you are going to make mistakes. And very rarely do I think in 35 years, I made one mistake that I actually made money on.

And I’ll tell you exactly what it was. I was long gold. I think it was many years ago, 15, something years ago more. I was long February gold, beyond first notice and I got delivered against, so it wasn’t technically a mistake, but it was something that I should have known better. And I didn’t, and I was already a pro and I got delivered gold and I didn’t want it. So I had to unwind the whole thing. And somehow in the end of it, I think I netted two or $300, but the it’s not the money’s insignificant. The thing is, is that’s, that’s not what I wanted to have happen. So I look at that as a mistake.

Anyway, if you have any questions about this, so you want to get more clear reach out via email and I will help you discover what’s best for you based on what you’re willing to do and what you’re willing to feel. because if you’re unwilling to feel those feelings, it’s going to be very, very difficult for you to succeed in the trading world. And that’s good for anyone. Who’s got a thousand dollars or anyone’s got a hundred million, the feelings that you don’t want to feel have as much control over you as the ones that you think you do want to feel.

Please consider subscribing to the show. We’re all over the place in YouTube now and Spotify and this and that. So there’s plenty of platforms where you can consume the in the content. And if you haven’t already gotten a copy of the audiobook version of the Inner Voice of Trading, you can get it for free at MartinKronicle top right corner. Thanks for being here. Folks. I’ll see you tomorrow.

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You don’t have to trade every day

I got an email Saturday about “Hey, you know, I find myself forcing trades in these markets.” And I said, wow, that’s great insight on your behavior. When the markets are the way they are, which are super tough, you know, for long, only traders, you can find yourself especially if you are a discretionary chart reader coming to the market, every place doing your due diligence, you know, scaring the world for however, you’re finding your names and then feeling as if as every day comes, you actually have to put on a trade. And I think the big difference between pros and the amateur market is the pros only trade. When they have an absolute edge that they can affect onto the marketplace. Then if they have to, they sit on their hands and let the day go by.

Why do they do that? Well, each day is only like one little speck of sand over at west end two or in Santa Monica bay, the big beach, right? So it’s not that big of a deal. If you sit on your hands for a day, the last thing you want to do is put good money after bad. You see? And so it also helps you keep a good frame of mind because if the market is not amenable to your trading style or vice versa, you’re not forcing things just like in life. I mean, as soon as you start forcing something, you almost know intuitively that it’s not going to work. It’s true in relationships. It’s true in jobs. It’s true in a lot of spots. So why people try to force trades is kind of, I mean, I kind of understand that you feel like the fear of missing out.

There’s gotta be opportunities somewhere. You see this when people downtime into intra day charts, right? When there’s nothing happening on the weekly’s or the dailies or worse they’re in down trends, some brain surgeon out there is going to start looking at intra day charts to find the UPT trend. This is a fool’s errand, so don’t do it, but it does make a lot of sense to run your screens. And if you don’t see anything, turn off the computer, go find something else to do and come back tomorrow, start over. You don’t want to have to feel as if you have to trade every day. I don’t know where it started, probably through all the marketing that’s done to the folks who want a day trade even short term traders, don’t have to put on trades every day. It’s not good for your psyche. It’s not good for your overall well mental wellbeing. And it’s certainly not good for your P and L. So if you find yourself feeling like I need to put a trade on,

Take a look at that and say, where’s that coming from? Whoever made that rule, right? It’s probably the same person who said you can’t possibly take home an E mini contract overnight, right? It’s stupidity who would ever say that makes no sense whatsoever. There’s no generalizations that fit for everybody on planet earth. Now that’s a lot different than having a signal or a trade, and then not putting on that trade and then missing the trade. That’s a different story, right? That’s when something is absolutely clear and abundant, and then you don’t take the action that you should, but the action is only when the setup is there or when your model, if you’re purely systematic fires, a trade, I know purely systematic guys right now who are still in a draw down. So the advice there is to cut your position size take a big haircut.

Meaning if you’re down from a hundred percent, say you’re down 10% so that you have not what I call 90 cent dollars from what you used to have at the highs, cut your equity down to 60, 40, 50, 60% and make your risk units based on a smaller portion of your capital. This way you can still be true to your system. You can still take every trade, but as long as the market, isn’t showing you any love, you’re not taking these bigger risk unit losses sooner or later, it’ll turn like it always does. At which point you can find evidence to increase your position size again. When would that be? I don’t know, one or two months of positive P & L maybe 6 out of 10 winners winning trades. That’s really very subjective. So it’s hard to tell without knowing a person’s particular set of rules, but it’s food for thought.

That’s the main thing here. You have to figure this out yourself. Anyway. Thanks for being here. Please consider subscribing. I’m getting some really good data and the more people who subscribe, I get a much more pluralistic look at what’s going on in the environment and what you like, what resonates with you. And that’s important, because I don’t want to waste my time and I don’t want to waste yours. If you haven’t already gotten a copy of the audiobook version of the inner voice of trading, you can get it for free at Martin Chronicle.

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Preserving your capital

So following on from yesterday, I guess the point I’m making is that many folks when they’re coming to the marketplace and even some very, very sophisticated folks, who’ve been around for a while, start to think like, ah, I’m in a draw down. I gotta find ways to make money. And if I’m allocating money, that’s not my outlook. I wanna hear you say things like my goal is to preserve my capital. My goal is to minimize my losses. My goal is to sit on my hands when I don’t have an edge that I know I can exact on the marketplace, because the money that you don’t lose, you don’t have to earn it back. And until you’ve been in that spot where you’ve gotten blasted, all right, that puts you in a very bad emotional spot because you always say, wow, I should have known better.

And that’s a tough spot to be in because now you’re trading with scared money you’re down. You have regrets, right? Been there, been there. It’s easy to get. It’s easy to get to. So remember, I don’t care if you’ve got one month under your belt. And you’re really, really excited about whatever the fed of the day may be. The market is always morphing to try to have you give them their money. It’s not quite as bad as playing the lotto where you have negative expectation, negative, expected value, those games. Somebody definitely wins, but the game is a negative expected value. If you play it long enough, you’re just gonna lose your money. So at the end of the day, make sure that you come to the marketplace excited about what you can do, but get excited. Not about the names, get excited about creating your process.

The names will come and go. Right? When I was younger, there were all kinds of NASDAQ names that were exciting even before the the internet stuff. But what you needed to get excited about was the process. What is your process that you can follow day after day after day, the names aren’t people to, or things to fall in love with they’re just waves to surf…Yes. Fundamentals matter. You’ll hear these chart reader guys be like, I don’t give a shit about the fundamentals and some kind of bullshit, macho talk, but fundamentals do matter. Ultimately, companies have to make money. If they’re gonna keep trending up sooner or later, though, trends can certainly end in reverse stocks. Of course are secular. Some sectors move in and out of favor, commodities are cyclical. And obviously they gyrate as well. Moving in and out of favor, of course you could trade stuff long and short. You’ll have to figure out what’s appropriate for you. But at the end of the day, the goal, no matter who you are and how excited you are is to keep your losses small. If you think you have superior knowledge in crypto, you might come in with a lot of hubris

Because you might know more about blockchain. You might even know how to write in has school and this and that, but that doesn’t mean shit in terms of whether or not you could manage risk. So don’t get over your skis about what your knowledge and your wisdom is. At least if you’re trading, cuz trading is a skill as is coding, right? Investing is something different. Sure. You can buy ADA at 40 cents or whatever it’s at and hold it for a hundred years and claim to be Warren buffet. But we saw what that we saw, how that played out with CMGI and internet capital group in scenario. They were calling David Weatherall, the, the Warren buffet of the internet, go look him up at any rate. You don’t wanna be in that spot where you’re losing money because you think you’re onto something while you don’t have a process.

And I’ll say it again. If I’ve said it a million times, your goal is to not lose. If you wanna get pro results, you have to think and do what the pros do. And the pros wake up in the morning, not necessarily in fear, but they’re always thinking about their blind spots. Where can I lose? How can I lose? What am I missing? And if you don’t have that type of mindset, you put yourself in a very bad spot because you end up being the philanthropist. That’s giving all the pros, their gains. It’s the way that it works.

So play the same game, focus on not losing. Of course you can be excited about whatever name you wanna be excited about whatever instrument you want to trade. But the thing is you wanna be focused on your process and if you don’t have a bonafide process, then stay out of the market, cuz you’re gonna give your money away. You might as well give it to the guy on the street. Who’s starving. At least it’s going to a good cause. All right, that’s all I got for you. I’d encourage you please to subscribe. Cause we get some really good data past two weeks. You folks have liked this quite a bit. So that’s helpful. So I know kind of stay on track or what you like, what you need. Of course, for those of you that don’t write in, we’re on YouTube, Spotify and all the other podcasting platforms. If you have that software, which you can get for free, you’ll get every episode that we publish right to your device every day, every morning, Pacific time. Also if you haven’t already gotten a copy of the audiobook version of my book, the inner voice trading, you can get that for free. It’s very helpful in markets like these Martin Chronicle top right corner. It’s on me and that’s it. I hope you have a great weekend. Clear your brains. Come back Monday fresh. I’ll see you next week.

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Mental Capitulation

There’s really two types of capitulations that occur when people speak of such in the marketplace. The, the one that you can see that’s terribly skin deep and almost kind of banal, cuz everyone sees it after the fact is the massive deluge of selling – the puke point – the parabolic down kind of movement where the folks who didn’t take losses earlier, when they should have just can’t take the pain of being long stock anymore. And they indiscriminately hit the cell button. That’s close to a bottom typically, but as, as you can imagine, that’s not how I see things because I see this as an emotional reaction, right? So it’s probably the same thing. Just looked at two different ways if you want to get specific. But what ends up happening is the mental capitulation happens first. And then people just throw up, throw in their cards.

They muck their cards, they throw up their hands, you can figure out how it works and cuz they just can’t take the pain anymore. Right? There’s all that. There’s the fear of missing out. There’s the fear of not participating. There’s the fear of expectations not met and they just get frustrated and disgusted. Why will cuz they didn’t really have a plan to begin with. They put their money to work. The money was making them money. But then when market conditions turned sour, they realized they don’t have a plan. They thought it would just be a 10% pullback. They got hit more than 50% on their Disney for example, which is still trading at a 70 multiple and they just get disgusted. They don’t trust the system when they really don’t trust themselves. The other thing that can happen is if you’re smart enough to have taken small losses and you’re sitting in a ton of cash is you can have the same type of reaction on the buy side.

You might look at the market and say, oh my God, it’s come back so much. It’s down 30, 40% tiger. Management’s getting killed. I’m not in tiger. But if they got killed, how I can certainly have that happen to me. And so you kind of capitulate on not participating and you start to plunge or jump back into the market because you feel the pullback is reasonable enough, right? And it probably won’t go down all that much. So that’s a gigantic mistake. What you learned the hard way is to sit on your hands and to get comfortable with that. Knowing that days, weeks, months, maybe a year is gonna go by before the market conditions turn around and become amenable to your style. So you can save a lot of money by not falling victim, to this emotional frustration of not being able to participate. Because everything that you see is going down, you can exacerbate this by trying to look at shorter timeframes, like intra day patterns in an otherwise downward market.

So if you are looking at trying to look at a rally in a down trend, look at the daily and the weekly charts. If those charts are down, I think it’s stupid to try to buy rallies on intra date charts. That’s what I’m gonna say. You probably have coaches and mentors are trying to look slick and be cool and trying to outsmart the market. But to me that’s a fools errand and more times than not, it costs you money. Sometimes it costs a lot of money. Why do I say that? Well, because I get the emails from the people who say I was with this coach and mentor and they were saying to do this and by this intro day breakout and not take stuff home and they basically stay say stuff because no, one’s there to challenge them like me. Right? So I get to call them on their bullshit…

I don’t mention them by names, but I know who they are. And that’s the problem with trying to sell tactics is that if you don’t know who the people are and what their psychological makeup is the client comes thinking like, oh, I’m, this is gonna buy my way to trading salvation. And you learn the hard way. That’s not the case because you are the biggest thing that you need to study. So if you fall into this trap of thinking like the solutions that you need are just one more trading tactic, you’re missing the point, all the trading tactics that you’ll ever need, you can get for free probably on YouTube. I don’t know for sure, but I’m, I bet a lot of money that that’s the case. The question is which one is best for you. And you only get to know that from trying it out, right?

And the way you try it out is you pick one tactic, one setup, one chart pattern, and you get really good at that. And it might take you a while. You’re gonna lose money. That’s the tuition that you pay to figure it out, right? If that bothers you, you’re in the wrong business, you can always go to paper trading, but that’s like watching porn. Would you rather be in the sack? Would somebody, would you rather watch someone else be doing it? So at the end of the day, don’t find yourself in this fear of missing out stuff or thinking like you can’t take the frustration of not participating anymore and wanting to nibble back in because that’s how you lose a lot of money. The market is communicating with you. It’s saying stay away. I’m not interested in going up right now.

And so if you come to the marketplace saying, Hey, I know you’ve pulled back, but I think you hit a bottom right now. And the market’s saying, no, I feel like shit. I don’t want to talk. I don’t want to go out. I don’t wanna have friends over. I’m not taking deposits and you want to go ahead and step in do that with like one 10th of 1% with a call option where you can keep your losses small, but don’t make any big pronouncements. Especially if you don’t have any experience, cuz you don’t know you haven’t lived through it and you can infer what you think or what you feel, right? Feelings, aren’t facts.

And this is a message to try to help you save money. Cuz I’ve been in these situations before where you have all these prognosticators coming, say the market’s near a bottom. Fuck. Do they know? Don’t trust anybody in their opinions? You have to do it yourself. The market’s going down. Don’t fight the trend. Okay. Anyway, I’ll talk to you tomorrow.

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The selling comes from being mentally wiped out.

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Your feelings around losing money

Hi folks, happy Wednesday. So I got an email saying effectively through about 45 minutes worth of text, it was definitely a TL;DR scenario but I did my best. The author of the email said effectively, I’m afraid to lose money. I don’t know why that is. The money is incidental. It must have to do with the feelings around losing money. Right? A lot of people, their family, their parents, especially put a lot of pressure on them to be right, to be smart, because that’s what they think. They equate that with success. They don’t think of things in terms of expected values. And so, my whole take on it is don’t think about losing money, think about losing percentages. And what I mean by that is, and I’ve said this before, go buy one, share of Amazon and trade it.

Because in the beginning, you’re not trying to make money. You’re trying to find a set of rules with which you’re compatible. Right. And if you’re sitting on a hundred million keep scouring the, the earth because there’s opportunity everywhere. Especially if you look at the world from a long, short standpoint, right? There’s no reason to be sitting 90% cash when you have that much money, unless you’re just kind of doing this for fun and kind of looking at it as a hobby, because you don’t have anything else to do, which is cool too. But there’s opportunity everywhere. And for the newer folks who don’t know what they’re doing, I would still advocate getting in the game and having some risk on because that’s gonna teach you and help you calibrate your system. Your system is your rules are the things that you do that help create your P & L.

And so if you keep track of your actions and you put real work, real money to work, that’s gonna help you a great deal. And that’s gonna be helpful to help you decide your edge. Once you have your edge we talked last week about that catch 22 that you want to trade when you have an edge. But when you’re first starting out, you don’t have an edge. So you have to trade anyway, right? But by doing “the trading,” you’ll help figure out what you’re good at and what you’re not good at. So that’s goes a long way to help you discover what your edge is. Once you’ve discovered your edge, then you can scale it and amplify it and start to trade bigger. But this way you will not have burnt through a ton of cash by trying to be too big or too aggressive with all your hunches, right. You will have put in your due diligence. You will know for sure, because you can see the data. Remember it’s it’s the dollars. Don’t matter. Think about risk and say one fourth of 1%, one 10th of 1%. It doesn’t have to be big when you’re starting out.

And again, that goes for the folks who are sitting on eight, nine figures, when you try something new like, oh maybe this is time to sell call spreads or something like that. Or to buy Put spreads if you don’t do it outright. So just do one spread. It can’t possibly kill you, right? Because when you do spreads, the most you could make or lose collectively is, is the distance between the two strike prices. So do it and see how it fits. Look at intra commodity spreads. For example, if you’re afraid to go long or short crude oil or anything else for that matter think about looking at spreads, if they’re better or more appropriate for you because this way in the doing of it is how you’ll get a really good education. And now again, I don’t know, who’s listening. So you have to talk with your financial advisor about what’s the best bet for you and what’s mostly appropriate for you given where you are in your life. I don’t know any of that information. So I can’t say what is best for you if you reached out can give you some insight, but I’m really not in the financial advice business anyway.

There’s something else that I’ve picked up on. I kind of hear it once in a while myself, although I very rarely listen to the episodes once I record ’em and edit them and then put them up is that sometimes when I’m speaking, you might hear a, a gap of me not speaking as if I’m trying to gather my thoughts. The truth is, is that seems to be a software glitch. That must come from one of the two effects that I run on the audio file as I’m producing it and getting it ready for publication. I’m not sitting there with long gaps of silence trying to gather my thoughts. So when you hear that, it’s probably a glitch in the software, I’m trying to figure out why it happens and what I can do to fix it. And so I just wanted to point that out that it’s not me sitting there kind of looking up at the stars for inspiration or otherwise. So I’ll see what I can do to fix it. If not just realize that it’s a glitch in the software and it might be something we have to live with here in MartinKronicle Land. All right. Have a great rest of your day folks. I’ll see you tomorrow.

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Think in terms of percentages, not dollar values.

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