The one thing I do to check myself and to keep myself in line is to look at my habits, right? Because the habits reflect my behavior and my behavior predicts where I end up. So one way that you can completely steal this from me is go to school on yourself. It’s a saying that they have in golf, actually go to school. So what I do on any given week, I don’t necessarily look at the results, right? Because you can play a poker hand of aces really, really well and you’re going to get your aces cracked. You can’t look back and say that you did the wrong thing just because you lost the hand, as frustrating as it might be. So what I do to keep myself in check is I say, okay, are my habits today kind of parallel or congruent with the vision that I have for myself in the future?
Now, the future for you can be next week, next month, next year. It probably comes down to returns, but returns are a function of also like your behavior. Why? Well, if you think about it, whether you’re scalping or whether you’re position trading and regardless of your asset class and holding period, the winning trades are there. It’s up for you to kind of use your metal detector, so to speak and find them, and what I have found is that the reason why most people are struggling is not because of the how-to part of trading, right? I even found that out from myself. There was a world of information. I kept feeding my brain thinking that that was the solution, but it’s actually not. You find yourself in that spot when you’re dying for reassurances, and guess what? There aren’t any. There aren’t any reassurances. This is probabilistic, and that’s the feeling tone of what I mean when I say that.
I wish I could tell you that if you put tab A into slot B, the result would be exactly guaranteed and predictable every single time, but it doesn’t work that way. You have to get used to living with the uncertainty and unfortunately, that’s what makes people freak out and stop their habits not being able to deal with the unpredictability and the uncertainty. Whereas if you do more traditional professions, you can have a vision for that. You can see what the outcome is. If you go to school, you get an MBA, someone becomes a CPA or an attorney. That type of lifestyle is pretty predictable, especially the paycheck part. With trading, it’s very, very difficult because you don’t know when your winning streaks are going to show up. You don’t know when your losing streaks are going to show up. So you have to put yourself in the mindset that regardless of the outcome, I know my system has positive expected value. That’s my edge, and I’m only going to trade when I have my edge. I know when I do that. I know at some point in the future I don’t know when, but I do know that and I trust I that at some point in the future my dreams will come true. I’ve seen that enough in my life in everything that I’ve done, not just around trading, is you have to have the vision first. If you have the vision first, you can work backwards and get to the behavior part once you know who you are and what makes you tick. To me, finding the right trading methodology is then the easy part because those are finite when you think about it. And what do I mean by that? So just on the back of a napkin, there’s really when you slice it and dice it, what four asset classes. There’s interbank, foreign exchange, there’s commodity future contracts, there’s options on equities and futures, which include futures on currencies, and then there’s stocks. Right now, I suppose you could throw in rights and warrants, but to me, I don’t really look at those because they work more like options.
So at the end of the day, then what do you have? You have holding periods. So when you think about that and you start to come up with the combinations of are you going to scalp this? Are you going to position trade that? Are you going to trend? Follow this. Even with that, you have scalping. Then you have, we could call it swing trading or day trading. We have scalping, which is a really short window of time, could be seconds to minutes play with me here. Could be longer. Of course, you can define it the way you want to. I’m just giving you an example. Then you have day trading, which might be a longer period of time within the day longer than the scalp. The next step would be some type of a swing trade, which could be one day, three day, four day, even five days.
It really depends who you speak with. And then you would get into say, position trading slash short, intermediate or longer term trend following position trading. And then at the other far end you have investing, which is kind of putting on risk with an open-ended selling or upsetting risk strategy. So when you look at all of those asset classes and you say, okay, I have four asset classes and I have five or so ways to trade them over a certain time period, then there’s only so many combinations that you can come up with. That’s the good news. So for me, I’m like, okay, well I can quantify that. So now I just have to find for what I want my money to do for me, and what do I want to get out of trading? Do I want some kind of pleasure or how does that serve me in my life?
What’s the purpose of it? So once you get to that standpoint, you can figure out the right combination for you that should become habitual so that every single day you know how you’re going to trade and affect your edge because otherwise it wouldn’t make sense for you to put on a trade at all if you can’t affect your edge and an edge in, again, back of the napkin, kind of back of the envelope type of definition would be just in a situation where probabilistically that when you affect this setup or this chart pattern, whatever it might be, that there is a positive expected value. Now there’s a video on positive expected value. You can go look it up here on YouTube and there’s probably more resources At Martin Chronicle. It was hard for me. There was no cottage industry for helping people. The internet didn’t exist, and I know how hard it is.
I know how firsthand it is. In fact, I wrote a book about how hard it was. It’s called the Inner Voice of Trading. It’s got four and a half out of five stars. I give away the audio book version. You can get it for free, the links in the description. So don’t tell me how hard it is. I lived it and there weren’t the resources that there are today even on some of the things that I don’t necessarily poke fun of, but I want you to be conscious of telegrams and private Twitter channels, and of course we’ve got discords. My whole thing on the coaching and mentoring is like the same ethos that I have for doing any of these podcasts or these shows on video in that if I can’t say it in five minutes, then I really can’t say it. There’s really no reason why I would have to get to the bull pit like the monsignor at a church and preach the same damn thing day after day after day and you don’t get it.
You see what I’m saying? If I’m doing my job, which is to give back to the community, you shouldn’t have to pay me month after month after month to get the message. I should be able to communicate it to you in an effective and efficient way that you can take it and put it to work. That’s the whole point. I’m not looking to get a teddy bear to hang onto every night to fall asleep. That’s not the right coaching and mentoring that you should be looking for. There should be a finite window of time, right? My thought process is that if this starts to look like therapy, something’s wrong because so much of this you can figure out on your own. You don’t need a therapist.
It’s pretty basic in that regard. So while I’m not calling anyone’s girlfriend ugly, you have to look at that relationship because the coaching and mentoring that I do is finite. It runs six to 12 weeks, and if you can’t get it by then, then you can’t get it because after 36 years, I know absolutely how to prescribe if I do enough listening to guarantee you results. If you don’t do the work, you’re not going to get anything. You have to be willing to accept the risk. Are you able? Of course you are, but you have to be willing to live with the uncertainty and to get comfortable just knowing that that’s the way it works. But if you don’t develop the habits to go back to the top of the conversation, the predictability goes out the window because you know that over time, if you tell me what you’re losing percent is, I can tell you the frequency or the probability with which you’ll have a losing streak.
I can also tell you how you’ll have a winning streak and you don’t even need me for that. You can do the math yourself. You can predict what it would be like to have three losers in a row. You can predict what’s the probability of you having say, five winners in a row. That’s not terribly sophisticated, but what I do know is that behavior predicts the outcome and until you align your daily habits, your daily behavior with what your vision is for the future, you’re going to be a mess because everything’s going to look good because so-and-so did it effectively. I might as well try it and here’s Tommy over here. He did this strategy, oh, I might as well try that again. It falls into the parameters of the different combinations you can get between asset classes and holding periods. You’re going to find that there’s probably a handful of people across any number of those combinations that are doing well. But whether or not that actually works for you is yet to be seen because you got to try it on for size and then do it consistently. The consistency is the magic potion here is can you dig in? Can you lock in?
That’s the hard part. Admittedly, I was all over the place. I wrote a book about it. Like I said, now, over that time, I had enormous amount of success, but the gloating of the success part doesn’t help you grow. Like who cares? Then I’m just another one of these 26-year-old guys saying, Hey, how AI is going to change the trading world and how you can make thousands of dollars in 10 minutes of work, which is a, come on. It’s the new snake oil stuff. The key if you want to really ramp up your success is work on your getting comfortable with the uncertainty.
That to me is where the rub is. The more you are willing to feel your feelings, all of your feelings, the greater that level of success you’re going to have sooner. So it doesn’t mean you have to be fearless. I don’t think there’s such a person who’s fearless. I think there’s people who feel fear, but are able to take the steps forward despite what they feel, right? If I’ve talked to the best salespeople that I know on Wall Street and they’re sitting with a billionaire prospect, it’s intimidating, but they don’t let that intimidation psych them out from going in and making the presentation. If that was the case, I wouldn’t have made any success. So that to me is really the toughest part of trading, and if a person is struggling, I’m going to bet dollars to donuts. That’s where it’s at. It’s ability for them to not accept because they want validation, they want reassurances, and those don’t really exist in this space.
The only thing you can do is look at your track record, and I don’t mean official track record. Just look at the results of your ongoing behavior, judge yourself on the consistency on the ability to do the same thing day after day after day. That to me is winning behavior, and that to me predicts favorable outcomes when I don’t know, because it all depends on your trading style, and then it all depends on is the market amenable for that particular trading style? Where people get into trouble is they try to do different several trading styles at the same time. The problem is all those trading styles have personalities unto themselves, and so you’re going to be schizophrenic in your brain here, multiple personality disorder. That can come over time for sure. You can train yourself to do it, but in my opinion, you have to start with one and do that consistently before you’re going to sit and try to do several different types of trading strategies so that you can be a person for all seasons, because that becomes very, very difficult.
Then when you’re looking at trying to decipher what’s going on in the marketplace and then decide what type of tool, again, I think you can do it, but I think it takes several years because you need to live through those market cycles and then make those adjustments. But if you want just to summarize everything, you need to make sure that you have the vision first for where you want to be and for where, and what and why, and how you want trading to serve you in your life. Then break it down to what your daily habit, your daily behavior could be, and summed up all of your behaviors in what we call a habit or habits where you can really start to predict your success is based on your daily habits. If you don’t have any, then you got to start over. Start with the end in mind, right?
I’m not the first person to say that work backwards to today and say, what’s the one thing that I can do that’s super simple that I could replicate day after day after day? Because until your behavior is kind of congruent with what your goal is and what your vision is for the future, I don’t think any lasting success is going to happen. You’ll get random bouts of it, and I’m sure it’ll make you feel good. My hat’s off to you because I’ll take good luck any day too. Why not? But if you want to actually be in control, then you need to have a definable trading edge.