Hey everybody, it’s Michael Martin. Hope you’re doing well. So I kind of can piece together some questions from lots of different angles. So this isn’t a specific question that came in, but it’s one that I kind of thought might make sense to talk about, and that is what is effectively the best trading strategy for me. So it’s very tricky at the beginning because you might see someone on the internet, you might know somebody that you went to school with. You might find it on social media, you might have read it in a book, this, that or the other thing. And you can really do anything. You can do any type of trading strategy that you want. You can look at options and everything that you could possibly do with options. Buying and selling puts and calls. You can do spreads and straddles and strangles, and then broken wing strategies.
You can do butterflies and condors. So there’s a million ways to look at options. You can use synthetic positions with stocks. You can trade futures in commodities, you can create spreads there as well. You can do interbank currencies and create all different types of crosses, but ultimately you have to pick one. And I know that sounds tricky because when you’re just starting, you don’t know. You don’t have enough data. But what happens is when you start to experiment, which is really what you’re doing at the beginning, you’re going to hit on something. It’s kind of like an artist who’s trying to find his voice.
When you do enough practicing, you’re going to discover something, maybe even by accident, you see. So I think a lot of folks kind of say, well, I want to do penny stocking, or I want to be an options swing trader your scalper. And I don’t think there’s anything wrong with that. I used to have much more bias when I was younger because you’re kind of proud of yourself. You’re kind of fully yourself too. I didn’t really have that problem, but I can say for sure that when you find out something that works for you, you can’t imagine doing it any other way. So you kind of have a relationship like you would with the significant other in your life. Thinking about another trading style would be cheating. So where I was lucky was that I had a small bit of impulsiveness, mostly because I knew where I came from. I knew I came from a working class background and that I wanted to change that. And in order to change that, it wasn’t necessarily about going to get education, which I got. It was more about my behavior. What was I going to do in and around that education to change my situation? I knew how to work hard by that. By the time I went to Wall Street, I’d been working half my
Life and making my own way. So that wasn’t the problem. I had a tremendous work ethic, but I had to learn how to work smartly because what happens is you come from working class background to a white collar job. What’s the first thing that you do when you think about working hard? You got to put in the hours, and that might make a certain sense. But then you learn about the studies that show that if you do an eight hour day, you’re probably only getting four or five hours of quality work done. So you don’t want to just be in the office because you had to be. And in those days, there was no work from home. There was no zoom because there wasn’t an internet. So there wasn’t Microsoft teams. So basically when you’re starting out, you have to pick something, you have to pick a strategy, you have to pick an asset class.
You have to pick a holding period and actually experiment with all of them and see which one fits. Now again, you might come in from a certain angle and be like, I want to do penny stocking, or I want to day trade stocks, or I want to do this and that. But at the beginning, in my humble opinion, you should be promiscuous. You should be someone who’s going to think about many different styles because until you actually do it, you really don’t know. Even though intellectually or emotionally you want to have this one particular goal, you don’t know until you’ve actually done it. You see. So I would say know what you can afford to risk, know, of course what you want to make in the beginning though, you are kind of like your own. You’re studying your own behavior at that point. So it’s not necessarily, you don’t grade yourself on how much you’re making or losing.
Yes, you have to keep your losses smaller or else you blow up your trading grub steak and you can’t do it, but you want to experiment so that you can actually find out what is the best strategy you, you’d be surprised to know how many guys that I knew who thought they wanted to be day traders realized that they just didn’t want to put that much work into the day to only have to redo it the next day. There was too much work for too little money, and so they learned like I did, how to hold onto their winners longer, which is really just about adjusting stops at that point. It takes the click of a mouse back in the day to pick up the phone, cancel and replace, and this and that, which really wasn’t that much work to be honest with you nowadays.
You could click on the mouse and say, cancel this order. I think on some of the trading platforms, you can just put in a stop, it’ll show up, and then you just move the damn line and that changes your order. So technology’s coming awfully long way. What I have come to understand myself was that the really, really strong moves can stay in effect for longer than you can imagine. And so I see too many people taking profits when they could let the thing run a little bit more. That was something I had to find out from myself though. It wasn’t an adage that you could get in the back of a fortune cookie. It wasn’t written in any book. All I knew was that in order to learn how to trade, I actually had to do the trading. And that’s why I
Advocate actually doing it with real money because that’ll be the best teacher you can get. There’s really no other way to calibrate your trait of psychology, your emotional intelligence with how to do tactically than to actually do it with real money. You can back test at the beginning to have an idea, but like I said, it would be you’d want to make sure that it was a robust system and that you absolutely tested when there were difficult times in the market. You see, for example, right now we have about eight names that are driving the Nasdaq, for example, and the NASDAQ seems to be breaking away from the s and p at least from where we’re sitting here. Doesn’t mean it’s better or worse, it’s just the, it’s life on life’s terms. You don’t have to like it. So if you don’t any own any of those individual names, you might find yourself, who knows, plus or minus.
But while I do agree that you can, like your mom said growing up, honey, you can be president when you find out who these people are. You don’t want to have anything to do with politicians. You know what I’m saying? So you’re like, okay, scrap that. Maybe Neil Armstrong was alive when I was a kid. I was actually alive when he stepped on the moon. So he was a big hero to many of us. So that requires a certain type of setup. You can do anything in trading that you want to put your mind to for sure. But keep track of your hours. Keep track of how much money you’re getting, keep track of what it is that you’re actually getting from the experience, because at the end of the day, we’re all pleasure seekers, and I think more people can succeed at this if they just be more mindful of their daily activities.
Keep track of stuff, not just how much work you’re putting in during the day. What are you doing in preparation? How far did you look back? What was your start date, right? And if you’re not seeing those results that it might make time to pivot. When is the time to pivot? That’s awfully hard question to answer because there’s really, we’ll talk about this on another episode, but there’s a few things that you have to measure how much time you’re putting in and what kind of progress you’re making, what realizations are you coming to? And you can only do that with a journal. And I, I believe taking out pen and paper and actually writing it down, it’s a lot more insightful than typing it into the computer. But at any rate, I think it’s a good point, a good thing for you to study for homework and keep track of, because what gets measured can become improved upon. Thanks always for writing in all your comments and your questions. I appreciate it a lot. It’s very humbling and I’m glad I could be here to help you along your journal and along your way, your journey, please like and subscribe, and click the bell thingy as Ganja likes to say, and I’ll see you tomorrow.
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