Hey everybody, it’s Michael Martin. Thanks for being here. While you get a chance, please like and subscribe to the show. Leave a comment if you’d like, because then it gives me good feedback as to where I might’ve hit it, done it well, or done it poorly. For example, in the show, got a question about what’s the best attribute that a trader can bring to the table from, say a personality standpoint if they want to be a great success in the market, is they have to be math whiz and they need to know how to code and python or rubion rails, whatever that it might be, or just have a great feel for the market. And the answer probably won’t surprise you. In my humble opinion, the best thing that a trader can bring to the table is actually a good attitude, which probably makes sense because I don’t think you can do anything in life as a profession if you have a poor attitude.
It’s okay to be in a bad mood once in a while, but you have to watch it because ultimately you get what you think about. And if you’re walking around pissing and pissing and moaning all the time, you just get more of the stuff that makes you feel that way. So my take is because it’s such a game of failure like baseball and that you’re going to be wrong, some of you probably have very accurate systems, but for the majority of traders, in my opinion, they’re wrong. More than half the time could be 50 to 70%. And so if you know that from a mathematical expectation, you could also set up, say, an emotional expectation that’s attached to the results of your trading. Now, if you’re doing it by hand and you’re discretionary, you have to keep a trade ledger of all your trades and then download them into a spreadsheet or keep it going and then see what’s your winning percentage.
And then when you win, how big, what’s your average winner, and then what’s your average loser? And from there, you can calculate the expected value of what it is that you’re doing with the trading system, it’s a little easier because most of the software will calculate it for you and give it to you on the results page and do it very, very quickly and very, very accurately. So that’s one of the benefits I have in the software. But I think having a good attitude is important, especially when the markets are crazy, when you feel fearful when you’re losing money. Because if you know the expected value of your trade and what your winning percentage is, you can actually use that data to help you create a good attitude. Because if you’ve back tested your system for 10 or 20 years, for example, and you’ve seen that you lose 50 to 60% of the time, that just typically means that every other trade that you put on is going to be a loser on average.
And so having a good attitude and not becoming emotionally invested in the outcome of any particular trade, even if it’s your favorite setup, to keep your head on straight and have a good attitude and just say, Hey, it’s just one trade of hus, hundreds or thousands of trades that I’m going to put on. And no one likes losing per se, because you can’t be really good loser, but you kind of have to learn how to lose well so that you don’t go on tilt, right, and maintain a good attitude and just realize that your next winning trades around the corner, and it might take a couple of small losses before you catch one that really goes right. So that to me is the biggest thing I think is having a good attitude. When I look back and see what I was struggling, it was my belief, it was my vision that I had for myself and where I thought I could be once I got it down.
And that kind of pulled me to that goal, to the completion achievement of that goal, even though I had no proof. So it’s a little trick you can play on yourself in that, think of all your successes that you want to achieve in the future, but think of them as if you have them today and speak in your inner voice in the present tense as if you’ve achieved what it is that you’ve wanted to achieve, whether it’s making X amount of percent or a dollar amount of money or other types of goals that you might have. Usually it’s attached to a process, and usually your goal is in and around what it is. What is it that you want your money to do for you, for example, right? Because accumulating wealth is one thing, but if there’s no emotional attachment to it, it’s a lot harder to achieve when you can get excited about what it is you’re endeavoring because you can see what you can do with your ability or with your new found capital as it’s grown over the years.
I think that can help you keep a really, really good attitude because you know that you’re just one or two trades away from getting into a winning streak that you’re at any given time. You could lose money, but it could also be just bad luck and bad timing. So you try not to internalize the results, right? Because if you just follow the process and the process is bonafide, the process has positive expected value, then it just pays you on average to take those trades day after day after day, even if you find yourself taking small losses.
So if you know you’re going to lose, what you can do is kind of mentally prepare yourself for that ahead of time, maybe even Sunday, just say to yourself, Hey, here are my rules. Here are my setups so far for Sunday night, Monday morning, and here’s what I’m going to do. Here’s how I’m going to win the day is I’m just going to follow my rules and I’m going to stick to my system. And even if I lose money, I want to be able to look myself in the mirror and say that I kept my discipline and I didn’t get knocked off balance because I had a losing trade, or the market didn’t set up the way I needed it to or the way I wanted it to. It’s on it’s life, on life’s terms, and you just have to have peace around it. And sometimes it can be super aggravating and it’s not bad to get aggravated, but it’s what you do with that aggravation.
That’s where you don’t want to go on tilt. You don’t want to get into revenge trading. You just have to be completely placated and say, okay, win or lose. I’m going to get out of this situation exactly what I want. So if I want to get super, really, really angry, I’m sure you could find a way to let the market help you get into that anger and let that teach you what it, let your anger teach you something about yourself and your own behavior. It never paid me to get super angry because I only ended up hurting myself. And I think that’s probably a truism for most people too. Regardless of what your credit line is or how much money you’re running in your own account, if you’re not like at a hedge fund or a prop firm before the risk manager comes down and say that they’re cutting your risk by 30%, sometimes that’s just the way it goes.
So you got to make hay with what you have and stay in a good mood. I know it’s easier said than done, but whatever it is that you can do to keep a good positive attitude on things really is worth its weight and gold. I can’t think of another mental criteria or personality trait. Obviously you have to work hard, but you have to work smart. Putting in a long hours isn’t so virtuous if you’re not spending the time wisely. Cause a lot of folks just like to rack up the hours and see like, wow, I’m putting so much time in. But you know, have to get results. You have to get the results from the time that you put in. Otherwise you’re just going to find yourself putting a lot of time in and not getting any results, and then have nothing to show for it.
And then what happens? You get frustrated, angry, bitter, resentful, everybody else is winning, but I’m not. So it’s a very tricky deal. I live more like a hermit monk and I, I’m not engaged with other people cause I don’t want to hear how they’re doing, good or bad. I just want to focus on what I know I can execute day after day and therein is my discipline and my strength. So I hope that helps. I think attitude, whatever you can do to keep your attitude high and keep yourself esteem high in this very arduous practice, because sometimes, look, you might lose 10 in a row. There’s other times when the markets might be on fire and very amenable for what it is that you do. And you could be cranking. You know, I’ve had 15, 16 winners at a clip, and it happens, right? It’s random.
You can’t predict it, but you just take the trades and the market’s like, okay, we’ll go with you. Other times it’s like you can’t do anything. So if you trade long enough, you’ll kind of see one of everything. So just take it in stride and realize that the main thing is that it’s a marathon and you have to be able to come back and play tomorrow if you let your attitude fall by the wayside and start taking actions on the feelings that you don’t want to feel. You could put yourself in financial harm by losing more of your principle, and then you’ve got to dig out of a deeper hole. Remember, after 10% the rates of return that you need, meaning after a 10% drawdown is if you keep drawing down 15, 20%, you know, need a big, big winning streak to get back to break even. So be comfortable taking these small losses because the small
Losses are much easier to recover from than if you’re going to take a larger destabilizing loss, right? Because you’re acting out of emotion. So I would actually take solace in that and keep a good attitude and say, Hey, I’m doing just what I promised myself I was going to do, putting on all my trades and I’m losing good. I’m taking small, consistent, small losses, none of which could ever hurt me or put me out of business. And even if I added them all up, if you’re risking say two tenths of 1%, you could have five losers in a row and still have 99% of your overall capital at work, which effectively is all your money. So do whatever you can to keep a good attitude. Keep the comments coming, folks, keep the suggestions. I appreciate the time that you put in and I will keep making videos about the things that you think are important, at least for my experience to see if you can’t help you on your journey. Thanks for being here, folks. I’ll see you tomorrow.
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