Hi everybody, it’s Michael Martin. Thanks for being here. So yesterday we talked about some pretty deep stuff. We looked at the actual math around your trading, not the hypothetical stuff, but the actual results from the trades that you did. A lot more can be said about that data, but I was answering a question I think about accuracy, right? Someone said, how can you help me be more accurate as a trader? So look, yeah, if you got 10% accuracy, you need your winners to be many multiples the size of the losers given those winning percentages. But like I was saying, you can definitely go a long way by learning how to increase your winners. Now, if you’re million dollar trader, and that would mean risking who knows what, 20 to a hundred k of capital of unrealized gains, for example. You can always try that on a smaller scale just to see how it feels because ultimately if it doesn’t feel good, what are you going to do?
You have to find a way to make it feel good. You have to get, find a way to get comfortable being uncomfortable. And so maybe doing that at scale of where you are right now is kind of hard to do, but you can certainly envision it if you tried it on a smaller scale just to see how it felt. Because ultimately you do have to make friends with those feelings. And if you’re not used to scaling in or scaling out, I don’t typically advise scaling out. If the number where your protective stop was is hit, time to go, you don’t want to negotiate with the market, because in my opinion, you’re always going to lose and it’s always going to take advantage of you, right? Because you probably mean well, right? You’ve got good ideas around all of that. But what happens is if you start to negotiate with where your protective stop is, it’s really the party’s over.
It’s time to go. Your timing was off. Maybe you got some bad luck. Maybe your analysis could have been off. It’s probably not likely analysis if you’re already a million dollar trader or you have several million line of credit with your hedge fund or prop trading firm. The key thing though is to get comfortable doing best practices, and even if you’re a shorter term trader, say swing trader, you can still find room to hold onto your winners for as long as possible, even part of them anyway. Selling winners admittedly, is probably the hardest thing, right? It’s like when do you know the move is over and they say you can’t go broke taking profits? Well, that’s true too, but you know what? If you were in trades that you could have made, say, you know, doubled your money, but if you had stayed in other winners, you might have made 160%, and that’s kind of material.
So I think the goal should be to optimize the process by looking at your winners. Now, when I speak to folks about this and then you revisit with them and you say, Hey, what’d you, what’d make out of that? What’d you end up doing? I was thinking about it, but I never really got to pull the trigger change stuff. Ultimately, your behavior, your sum of all your habits, oftentimes referred to as your paradigm, and if you allow yourself to say, be lazy or unwilling to feel the feelings that you need to feel in order to make those changes, I look at that as emotional or a spiritual type of inflation on your goals because it’s dragging and holding you back from what you could be doing. So I don’t want to say throw caution to the wind and all of a sudden become completely fearless. I think most traders are probably risk averse in that they’re not risk lovers and they’re not risk. They know they have to put on a requisite amount of risk in order to get the return. We’re going to talk about getting return setting goals using Kelly criteria and all this and that. It’s an old school way. It’s nothing new.
So the key is making the attempts because the behavior part is what’s going to drive the change. Admittedly, it might not be easy to do in the beginning, so you have to try it smaller, right? Because you’re used to doing things a certain way. So if nothing else, there’s a comfort zone there. So now you’re going to shake that up and put new criteria on. So I wouldn’t let the inaction of your goal hold you back because that is a form of inflation when you allow yourself to just haven’t gotten to it. To me, when I hear that, it means that you weren’t really ready to feel those feelings, and the best traders in my mind are the ones who are willing to feel any feeling that comes up because they’re all trying to teach you something, right? Doesn’t have to be monumental, doesn’t have to be earth shattering, but it’s giving you some feedback on your behavior and ultimately you.
That’s the only thing that you can really control if you’re already a pro, is your behavior, right? That’s what you do. You stick to your discipline. Did you win the week? Did you put in all the orders that you wanted to put in, right? Because you’re powerless over the results. The best thing you can do is just follow your rules. But that’s why it’s important to know at least do they have expected value, positive expected value. It’s also good to know what’s your drawdown ahead of time, because the last thing you want to do is start to freak out when you’re under greater pressure in the drawdown. So plan for this. Take the action because the growth can really help you perform better and also get you to a spot where you can become more comfortable in a new methodology. Then you can grow from there so they get comfortable in the discomfort because that’s where the growth can be. And it doesn’t mean be reckless. You can do this on a small scale, but I know enough about my own behavior that when I don’t revisit my goals or I don’t make sure that I’m marrying right, the fancy word is praxis, where you marry belief with your behavior. That’s when you’re in the zone. It’s when you’re like, nah, I’m going to take a day off, or I’m going to coast. I’m going to do this and that. Now you might want to reconsider what your goals are,
Right? Because you can’t just state your goal. You actually have to take the action. That’s the thing that I’m trying to get across, is that it’s the action. Even if you’re fumbling taking of the action is going to help you learn about yourself and the process a lot more than sitting around in theory theorizing about it. You see, it’s important that you actually step out of your comfort zone and take a step in that direction. Could be completely smaller scale, but that to me is much more valuable than buying yet another book or doing more research or doing things on the theory side, because we don’t get paid to know stuff. We get paid to execute. So in order to improve your results, you have to learn to execute. Maybe not better, but differently. See, anyway, appreciate all your feedback. Keep the comments coming. If you like anything here, it’s res resonated with you on a deep level, please consider liking and subscribing. I get a good bunch of data, and then I can create more content that’s better for you, and I’m not wasting your time, especially don’t want to waste my time creating videos that no one cares about. So far, so good. So I appreciate your feedback. Thanks very much for everything, folks, and I’ll see you tomorrow.
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