Hey everybody, it’s Michael Martin. Thanks for being here. So as a corollary, t yesterday, I always think about these things after I hit stop record. There were things that I did when I was kind of in the struggle, and again, it wasn’t really a struggle. I just incorporated losing money as struggling, which wasn’t really the case once I gained a different type of maturity. Anyway, the one thing that I did do, which was a mistake, was I started taking flyers. Why was that? Well, I don’t exactly remember why, cause it was over 30 years ago. But when things aren’t working, you can put yourself in a sense of desperation, where you’re going to try anything just to alleviate the pain. Heck, you’ll take a small a hundred dollars win, right? Because it’s points on the board. It isn’t much, but it’s points on the board. And so my advice is don’t take flyers, right?
Well, that’s not the advice. The advice is if you do your preparation the right way, you can start to avoid some of these hair trigger responses that are meant to make you feel good. Admittedly, that’s what we do it for. We’re pleasure seekers, right? So I just had to say, okay, well, taking flyers without any preparation, I’m not at that skill level where I can do it. Some treaters can. I don’t think you’re born that way. I do think that you can develop that over time though. So my rule to myself at the time was, and this might help you, is when you do your preparation, you’ll have your wishlist, whatever you want to call it, potential orders, this and that, or where you’re going to put your stops.
And my rule was, if it’s not on that document, then it doesn’t trade, which at the beginning was probably harder to do. But after literally a week, I remember feeling relieved because now I gave myself, gave myself a healthy boundary to say, I can’t be watching C N N F N or whatever the show was at the time. CN BBC hadn’t really hit its its groove. I’m not sure if it ever did, but there’s certain parts of it that are pretty good. I suppose I don’t really watch financial tv doesn’t help me trade better, but I can remember letting that type of behavior creep into how I was doing things because I wasn’t desperate, but I definitely wanted a win. I needed to put points on the board. It’s like, how can you explain it? You’re a starting pitcher and you’re losing seven nothing, but you still have six strikeouts. You have something that you could walk away with. So I wanted to have that, something to walk away with for the day because otherwise I was losing money. So I drew boundaries around my behavior and said, okay, I am going to
Do exhaustive research. I do it the night before. I know some of you, especially on the shorter term, are doing stuff in the morning. We’re going to talk about that tomorrow and why I don’t think you want to do that. But at any rate, I drew boundaries with my behavior and I didn’t have all the theories then that I do now about human behavior in and around managing risk, especially myself, because I used myself as the Guinea pig. Everything I speak about largely comes out of my own experience. And the questions are really prompts, right? Because the answers are coming from my actual past, a lot of it, which was not, it wasn’t productive in that particular moment, but when you add it all up, it means something because I kept fighting my way through until I finally succeeded. So I would not let a TV story or an analyst upgrade or an earnings upgrade or take over rumors.
I would never let anything on the outside overwhelm my sensibility of good risk management. So I would prepare everything the night before and say, okay, here’s where I’m going to start to get interested and start to add risk for the way I was trading. Then obviously things have evolved quite a bit, but the point being is that I want to not let bad behavior creep into what I believe to be good behavior. Because again, I always knew that behavior predicts where you end up. You have to be in the game, you have to be in the action. And so I would write these very detailed order buck slips for all the trades that I wanted, and I would go through that motion deliberately, even though it was probably overkill because I wanted to reinforce it was the repetition of doing that reinforced. So I literally went to the printer and I had this heavy gauge paper printed up in these buck slips.
They were probably two and a half, three inches wide and probably five inches long. And I would have the date, the ticker, the month. If it was a futures contract, the price, what was the quantity? Most all those orders were stops. So I didn’t have to all put all the other qualifiers, time enforce good till, cancel, all that stuff. That was not the case when I would write that out on the buck slip. And so then I would enter my orders. A lot of them were phoned in, some of them were on the screen, although I didn’t like doing that as much because if you made an error, it was your fault on execution. Whereas if you call the order in to the trader, some of you might not have account size that are big enough account sizes that are big enough yet for that.
But I did, and that was a good, that was it. You know, get what you pay for. You’re paying a premium for that type of service. But for me it was very important because I knew trading errors can happen all too easily, easily. So then when I would call those orders in, I would put the day and the time, obviously the date was already there, but I’d put the time in that the order was placed in, and then who do I speak with on the desk? So I’d kind of timestamp my own thing. Then they’d say, okay, read it back to me. They’d read the order back to me and I’d say, okay, well what’s your tick your ticket number on your desk? Cause it might have been like the first trade of the day could have been the seventh trade of the day for me.
And he’d say, okay, it’s ticket one 19. So I’d write ticket one 19 on it as well, and then I would just hold it there and it would replicate that for as many orders as I would have to put in. So then closing bell would come for the various markets because they all don’t close at four o’clock east and stock market does. But futures markets, depending on the market, they all have different closing bells, so to speak. So then at the end of the day, I would call up the desk and I’d go through, I’d do what was called a checkout, and I’d go through all the orders that I had entered and say, okay, is there anything done on ticket 1 19, 1 21, 21, anything like that? Nothing done. Those orders were all good for the day, and so nothing was done. Those orders are there for canceled.
But this, although it might seem like it’s overkill, made a moat around my own behavior because now I developed a process that was also super disciplined or more disciplined than I had coming in to that period of time where I was struggling. Now obviously, I went through a lot of buck slips because every time if I put in 3, 4, 5 orders on any given day, again, remember stocks traded in eighths, there was no internet, there was nothing wireless. So everything was phone talking to people. I developed a routine that I was able to practice day after day after day, and that reinforced discipline. So then when I’d, someone would come by and say, oh, it looks like the corn spreads are moving or this, that, or the other thing. And I’d be like, okay, well that’s not my trade. You can trade it and it might make you a lot of money, but just like you have a personality, you have a certain trade, it’s your trading style.
So people would come up and say, I’m in this trade or this, that or the other thing, and I’d be great. And they’re like, are you in it? And I was like, no, it’s not my trade. So that’s where I didn’t give my per sense, give myself permission to mis trades. But I also realized that each person has his or her their own trading style. And so I need to stick to my trading style and not feel bad about missing out on things that other people might be in because their style was different, you see? So I encourage them to keep doing what they’re doing. I congratulate them on their success, but I wouldn’t look at big moves necessarily as things that I missed if it wasn’t my setup or what I was or my following my rules. So that was really, really important as far as preparation was concerned.
And then I just continued to study my own behavior over time so that I could correct myself. So you have to measure everything. And even though I have a mind, like a trap, it was better for me to write stuff down because I would remember more of the salient points over the course of sure, if it’s Friday, I can still remember what I did Monday very vividly. But as months and months would go by, it was harder to have that kind of recall on the minutiae. So I would write out detailed notes, not as to why I was in the trade, because that’s more of a fundamental type of a thing. For those of you who keep index cards and fundamentals are definitely important. But I think without, let me put it to you this way, I’ve taught CFAs and even they can’t get it right?
So don’t sit back thinking you’re Mario Gelli because you’re probably not. And if Mario, you’re watching, thanks for being here. So I would just kind of say, okay, now here are my rules. I’m actually going to write them out. Why do you do that? Because it’s a pain in the ass, right? It’s just so much easier to click the mouse or fill in a spreadsheet thing or do this and that, and it’s all digital. But to actually take pen and paper, and this is just one. Here’s another notebook, here’s another one, this one. So I have notebooks for different things, plus my mouse pad is one of these thing that Jocko gave me this thing when I saw him in San Diego. So look, I want to help you develop the discipline so that you can study your own behavior. I know brokerage firms and other places alike are not going to talk about this because they can’t monetize it.
They want to sell you advanced charting packages, right? Because that’s intellectual. And if you’re feeling like you’re lacking, you’re like, I could just buy my way out of this. But it’s not like you’re at the poker table and you can buy your way out of a bluff, meaning you get everyone else to fold and you win. So I think you want to make sure that you focus on things that can help you enhance your discipline. And even if it’s extra work, to me that’s a good thing because then the way I looked at it psychologically for myself, I would never betray my own rules for the mere fact that I was putting in all this extra work and I didn’t want all that work to go for nothing. I knew that there was going to be evolution, and I knew that I was making certain attempts that would seem like it was wasted time, wasted efforts, maybe wasted even money. But like I said, your trading is going to be the best teacher to you than anything else that’s out there. You know what I’m saying?
So most of the folks that we consult to when we do that outside of our own trading is they’re already good. They already know how to trade, they just want to refine stuff, and that’s usually behavioral. So at any rate, these questions are really good. They’re really deep. There’s no simple answer to, I’m just writing some notes here so I don’t forget. There’s no real simple answer to a lot of these things because it all comes down to you studying your own behavior, you’re studying my behavior might be good from a role model standpoint. They say model people who are successful, this and that, and that definitely does work. But when you’re talking about trading, it’s so unique because of all the factors that go into it, especially your psychology and your emotional makeup. That’s what makes this so unique is that it’s hard to replicate somebody else’s emotional constitution if that’s not part of your emotional makeup.
You see what I’m saying? So the fact that I wanted to sell you a trading system or what have you, to me it’s very random whether or not you can actually use it and stick to it because each trading system like a human being, has its own personality as well. And so it’s like I talked about setting people up here in LA basically, everyone’s really good looking because they’re all in shape. It’s summer, basically 12, it was cold, it’s 50 degrees Fahrenheit, so it’s basically summer all the time. So people are always training and working out and hiking and swimming and doing things and being active. And it’s also, we’ve got the Hollywood thing. So the culture is based on how do you look, feel, and all this and that. And so when I think about trading systems and workout regimens, they’re all very, very different from one person to the next.
You see? And if I introduced two people who had similar things on a blind date on a Friday or whatever, and then I talked to them Monday and they were like, Hey, how’d the date go? And they were like, eh. And I’m like, what happened? And they’re like, well, there’s no chemistry. So you’re going to have two very, very good looking people who are successful and in shape and they go out on a date and the thing falls flat. Not because either one of them suck or the people are losers or whatever. It’s just because there’s no chemistry. When I talk about compatibility between traitor and his or her, their rules or trading, I use that kind of stuff the same. Similarly, because I do think folks who have a strong sense of discipline can actually do things on a discretionary basis and replicate that over and over and over again. And it is a fact kind of a system, even though they’re kind of figuring things out largely the day of or the day before.
So your goal is to have chemistry with what you’re doing and the best thing to do is to kind of do a lot of different things to see what you like. It’s tasting many things off the menu. I had, I mentioned that in a previous episode, so go easy on yourself. But I would definitely put the extra effort more into the discipline. And if that means doing extra work to make sure that you’re not leaving anything uncovered, then that’s the type of work you have to put into the show. I mean, you get out of it what you put in. Most of the time you’re going to find that eliminating things is probably a good thing and keeping it super, super simple. That’s one thing I learned for sure over the years. Anyway, appreciate all the feedback and the comments and the emails. Please keep ’em coming.
If the show resonates with you on any level, please consider liking and subscribing because I get some good data. I can see actually for those of you who are newer, I can see who subs, how many subscribers I’m getting on a per video basis, and that helps me understand what shows and what messages really resonate with the audience, right? So I appreciate that feedback cause I don’t want to spend a lot of time recording stuff that won’t resonate with you or what have you, and taking up your time. I also don’t want to sit and record stuff and waste my time, even though it might be somewhat interesting, if it doesn’t help you move along the path faster than it’s a waste of time. Anyway, thanks very much for being here, folks. I’ll see you tomorrow.
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