Developing your feel for a market

I received some immediate feedback about why does it take so long? And I got an email from somebody, an email from someone like late last week that I want to address. I’ll address that separately because it’s much longer email. The feedback in the short run on why does it take so long is because whereas it’s easy for some of you to understand the fundamentals and where it’s easier for some of you to understand trend lines and chart patterns, if you don’t have a feel for the markets or the market that you’re trying to trade, it’s going to be very, very hard to become a success at trading that market.

And that only comes from doing so. If you’ve heard me say on other episodes the best way to learn to how to trade is by doing it. That seems “bass ackwards” to some folks because through everything else you’ve tried to learn, there’s been a course, a teacher, a book or something like that. You’ve never really said, Hey, dive off the deep end of the pool and teach yourself to swim so that you can learn to be a good swimmer. That wouldn’t be terribly practical unless you had 10 people watching you in good dive in to save you. But you know, that’s kind of what we’re getting out here. You have to have a feel within the feel is where your trading edge is. Your trading edge isn’t going to come from a chart pattern. Everyone’s looking at the same chart.

Now maybe you have some fundamental insight that’s unique, but in the short run that’s guesswork. You see? And so even still, I think the commodities corporation guys proved that you can’t really trade on PhDs alone. You need to actually have some trading skill. And that’s why I say it takes a long time to get, It’s also why I’m not selling a junk courses because I think it’s unethical to charge people $10k to learn how to trade when it’s hit or miss whether or not they’ll actually be compatible with the very rules that I’m teaching. I know it costs me millions, but I have to go to bed with myself and then shave my own face in the morning. Those are my rules for myself.

And so that’s why I’m very skeptical and suspicious of people who do sell those trading rules because you’re there saying, Well if I just learned how to do this, like it’s a driving lesson. What did getting a driver’s license or a learner’s permit do for you? Did that indicate you were a good driver? No, not by a long shot. You still probably sucked. You had your mom or dad next to you, you had the babyseat in the back seat. It just said that you met the minimum requirement to achieve a learner’s permit. You didn’t really learn to drive well until you actually put the time in behind the wheel and became more comfortable with the wheel. Learn how to handle a car.

Doesn’t matter what kind of car you’re driving…but just remember though, you can soup up your cars and put all that bullshit on it, but at the end of the day, it’s still a Honda…it’s an inside joke in California. Anyway, you need to understand that no matter what you learn or how fast you can learn it, you’re going to need to develop a feel for the markets. And that’s unpredictable as to if and when it’s going to come. So for some people it comes right away. But if you read the stories from market wizards, it didn’t happen for the majority of these people overnight. It took them a while.

Some people refer to that period of time as like the hazing or the emotional tuition that you have to pay. There’s lots of words for describing the same thing. But everyone has to pay. If you want to dance, you have to pay the fiddler and it’s going to come in the form of trading losses. So you cannot study your way to financial freedom. There’s a lot of things that you could learn academically, but we get paid to execute. So now all of these lessons as we kind of come to, as the sun is setting probably on the podcast, they’re all coming full circle. You have to have a feel and you only get a feel by the doing of it. And by doing of it, it means you need to risk that money. I was talking with a client at first it was hard for them to let go of the money because they were thinking like consumers.

Every time they took a loss, they would immediately start to think about all the things that they could buy with that money. And so that’s a tough one to come out of if you are coming from a working class background and didn’t have a lot of money, it’s understandable, but you have to also understand that you have an investment account, which is to grow your money. If you kept it in a savings account -savings you know, is a whole other ball of wax. Savings in terms of economics is really the act of not consuming. It’s almost there for deferred consumption. Investing in tradings a different ball of wax. You know, you’re there to kind of grow your money and that means you have to risk money. I’d also, as you develop your field, get comfortable with losing small bits of capital more frequently, that you earn the the money – many multiples more capital when you win.

You have to get used to the expected value of a trade and that also takes a while. You have to learn how to trust yourself in getting this feel and no one’s immune to it. That’s why trading is so hard. It’s like, yes, anyone can learn it. Of course that’s easy. The marketing jackasses tell you that all day long. But even the best go through losing streaks. So to answer a question as to why is it, why is trading so hard when it looks so easy from the outside, it’s because on some level, it’s not really academic, it’s performance based.

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Trading rules if you’re starting today

So I got a nice email from someone asking me, what would my trading rules look like if I was starting today? And they might surprise you. So I wrote a few of them down. If I was starting today, what kind of advice would I want to help manage? The confusion in the cacophony of bullshit that’s out there that overwhelms your senses and tries to convince you that you’re somehow inadequate without participating with some type of premium service.

So couple of things would be don’t day trade. Nothing shorter than daily timeframe. No intraday bars, no penny stocks or anything under $5. Limit yourself to two trades a day trade, one asset class, trade one strategy. Do your own research and don’t join any chat rooms or subscribe to any services. Now granted, that’s a hard ass way of looking at it, but my gut is that you’re trying to be successful at this.

And the more you can do this on your own and the more you can be independent, the better you’re better off you’re going to be when you actually sit and create your goals and kind of connect who you are and your emotional constitution, your psychology with what you learn and what you know how to do. The other thing I’ll say is be prepared for anywhere from who knows, 6 months to 4 years of grinding it out and making attempts to figure out where your edge is. Because in order to do this, you need to have a trading edge that you replicate as frequently as you possibly can in order to create that abundance. I have found that the more frequently people trade and the more they look at real time date, oh that’s another one. Don’t have real time quotes. Real time quotes during the day creates an illusion that you should be doing something.

And what happens is, especially if you find yourself looking at shorter term timeframes, like intra day bars, you can get faked out because you’ll see random things occur in the marketplace that you might attach significance to. And the pros know that short term data is completely random and it’s hard to make decisions and it’s bad actually to try to make decisions on random data. You want more material data like daily and certainly weekly timeframes. Those levels are much more material. What’s happening intraday like new intraday highs in a down market. I can’t tell you how many people I hear from are getting blasted because they’re trying to trade the pop what market trends are down. So they’re trying to trade the pops.

Another thing is be diversified. I get an email from someone who, I mean I’m trying to help and he’s like, Well, I’m trading several instruments. And I’m like, Okay, what are they? He’s like the Dow futures, the E mini and the Nasdaq futures. And I’m like, Well those aren’t really different instruments. They’re really one instrument because they’re so highly correlated. So try to think of if you’re in futures, look at stock index futures. Maybe they’re all over the place, they’re like a drunk uncle. I wouldn’t trade them for the life of me. Or look at some like where there’s physical commodities. Look at say the grains and the oil seeds. Look at some of the energies and trade, if you’re going to trade more than one instrument, don’t trade two instruments in the same kind of asset class or grouping. You see now, a lot of people will say some of the penny stocks can grow from $5 to $200. Yes, that’s true, but it’s very rare. And being able to pick that ahead of time is too hard for you at the beginning. You don’t have the skill for it.

If you’re lucky enough and it happens, great, but if you’re a day trader, you’re not going to see the $5 to $200 move anyway. So don’t worry about it. Those stocks are based on rumor and conjecture and I would stay away from that at the beginning. Look at companies that try to trade companies that actually have solid businesses behind them. When you limit yourself also to two trades per day, you put yourself on a diet and that forces you to have stronger conviction about your names. If you don’t have any boundaries with yourself and you just double tapping your fucking hot keys or double clicking your mouse like that teaches you a lot about yourself that anything goes.

And I don’t know, it’s like somebody who overeats it doesn’t typically end well, nor does it look good. You don’t want your gut hanging over your belt as far as trading is concerned. So when you limit yourself to two trades a day, they better be good ones because once you’ve executed those two trades, that’s it. Come back tomorrow. I can’t stress how important that is to do the homework. You don’t want to be sitting there – it stops you from going on tilt. It stops you from taking trades that you have no business being in.

And if you do that within one asset class, that means either equities or futures. Maybe you trade equity options, maybe you trade fixed income, maybe you trade for x, I don’t really care what it is, but get good at one asset class because the characteristics within that asset class are probably more uniform. And that can help you develop a feel and the feel and the tact is what you’re going for here, because that’s what’s going to be key. It’s not what can you pull off, you see? So those are the types of things that I would be looking at is putting strong boundaries around my own behavior and also by limiting my view, by putting blinders on my head to keep me focused.

Because it’s too easy otherwise to become distracted and end up looking at things that might look interesting because of clever copywriting in the marketing. But I can assure you have no necessarily rev relevance in helping you become a better trader, Because that comes down to knack and feel. And that only comes from making attempts by taking two trades a day and limiting yourself to that or better. Even one trade a day. You get to do a lot of reflection and the work that you do on yourself is a thousand times more important than the research in the study that you’re going to put on the very instruments that you’re trading. Anyway, folks, that’s all I have for you today.

Please consider subscribing and also we are on Stitcher, Spotify, Apple Podcast is big. It might make sense for you to consider downloading one of those podcasting platforms because as time goes on, that might be the only place where I’m actually publishing those episodes. And the embedded player that you find at MartinKronicle might one day not be there on the site. And so if you still want to subscribe to the show, you’re going to have to get it through one of the major platforms, the software’s free. So have that as a backup plan. You’re forewarned. Thanks for being here, folks. I’ll see you tomorrow.

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Choosing the best brokerage

So I got some questions. Folks are kind of revisiting their overall practice and the business of their trading, so to speak. And I do get questions quite a bit from places that I could probably earn a lot of affiliate commissions from and that are online Broker/Dealers, Introducing Brokers, FCMs and things like that. And the truth to the matter is for where you are, if you are a retail trader trading your own money, there’s virtually no difference between any of them for where you are.

If you need specialized services that encroach on say, Prime Brokerage, then call me because there’s a different solutions out there. But if you’re just trying to put your capital to work and your trade and you need to have someone house your money and you have buy / sell decisions, hopefully looking at a minimum of daily charts and you could enter stop orders, most every place has such a trading platform that would allow you to enter market orders, stops and limits, and this and that.

I’m not talking about day trading, buying power and any of that nonsense, that’s not a concern to me. But in terms of being able for you to do whatever it is that you want to do, then I don’t think it matters. You should understand though that in the future space there is a difference between an FCM and an Introducing Broker. An IB, an Introducing Broker is largely someone that might provide research or some type of trading platform or some unique type of service. Maybe they deal with smaller accounts, I don’t know, but they introduce money, hence the name Introducing Broker. They introduce it to a clearing member, an FCM. Right now, most of the large Broker/Dealers out on the street are concurrently registered as a Broker/Dealer as well as usually an FCM, a Futures Commission Merchant, and an FCM, as it’s known as the entity that will buy and sell futures for you, but also house your cash.

So you send the cash to the house and then they buy and sell the instruments for you and then will collect the money, both your deposits, and then net out the gains and losses from all your trades. Someone has to hold the money. A clearing member on the broker dealer side is someone who has net capital requirements, blah, blah, blah.

The FCM side is kind of the same thing. It’s kind of like a Broker/Dealer on the future side. So you can do your own research and investigate whether or not you want to deal with an Introducing Broker. Maybe you have a relationship, doesn’t really matter. I’m going to guess the majority of you are doing things by yourself, so you don’t really have any human interaction.

I’m kind of just the opposite. I would much rather deal with a human being because the world is very dynamic and no matter how extensive an entity’s FAQ page could be or chat function can be, they typically they can’t possibly have all the answers to whatever questions that you might have that come up in real time. And that’s another reason why I don’t want to get into Discords because then people start delegating me these kinds of questions that they can go out and do on their own. And there’s not enough whiskey in Ireland for me to want to do all that. So I wouldn’t really fret over which company you put your money with. Again, there’s no such thing as an advanced charting package. So when you’re looking at what they market, the bullets, those are features and features aren’t necessarily benefits. What you actually need is the ability to buy and sell, probably with stop orders and maybe be able to move money in and out of your account.

Those are the basic functions. Anything other than that, you’re probably making the world too complicated for what it is, which you want to do, which is to grow your wealth. So I wouldn’t fuss over what entity to use as far as a trading online platform. They’re virtually indistinguishable from one another.

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Potential show topics

Hello everybody. Michael Martin, I hope you had a great weekend. I recorded a couple of videos on Friday with a friend of mine who will you meet shortly? He’s a great guy. His name is Shawn. I’ve known him for 20 something years. He’s very bright guy. They’re not going to be trading proper, but they will deal with finance and wealth and markets and investing. Again, I have no need to do trading videos. I think they’re complete snooze. Plus there’s a million of them out there. I know I could do my version of them, but I’m just, I don’t care about doing it. It doesn’t excite me.

And two, as far as the podcast is concerned, I feel, again, I only want to do things where I feel like it could be original. This show is original in that there’s not a lot of folks who are doing daily monologues that are completely selfless, where there’s no fee attached that are really there and built specifically for the audience. Yes, there’s interview shows, but I also feel like they’re a snooze. I did those in 2005 when podcasting was just kind of getting out. Friends of mine who would write books, I’d get the review copies, read them, take a bunch of notes, put questions together, and they’re out there. Jim Rogers, Jon Najarian, I had a million guys. Those, they’re probably out in the public domain somewhere, but it’s just like that model’s old and snoozy. It’s been done before. And two, I build my show here based on my own personal temperament, which is cantankerous and salty. Snarky. That’s just part of me. I don’t have as much as you look at the guy from Get him to the Greek movie (Russell Brand), He’s really funny. He has a good show, I think it’s called Under the Skin. I’ve only seen clips on Instagram.

Then of course there’s the bigger ones, Jocko and Joe Rogan. But I just don’t have the time for that. You know what I mean? I don’t have time for watching episodic television. I very rarely can go to the movies for various reasons. If there’s a good movie. I wanted to go see Amsterdam recently, for example, but the reviews were so dog shit. I’m like, Well, fuck it. I’m not going to go spend $20 to go sit in a movie that’s got 23% rotten tomatoes or something like that. Even given that the cast looks pretty damn good. I did go see the Sam Rockwell movie, See How They Run or something like that, because I like Sam Rockwell as an, I tend to character actors more than the leading people out there and I’m a big fan of Sam Rockwell. But the movie was slow it, It wasn’t necessarily predictable, but it just took a long time to get where it’s going.

And I reminded myself, this is why I do a five minute show. It’s like, say what you have to say, shut the f*ck up and be done for the day. No one’s got three hours to sit and kill. It’s the same reason why I hated Howard Stern growing up. I would never sit and listen to someone blather on for three or four hours. I never found the shock jock thing, entertaining, informative either. It’s just my personal preference. I know he’s hugely famous. He made fortune doing his show for I think it was WNBC and WXRK in New York City and then with Sirius, and he’s a very likable guy. It’s just not my style of entertainment. Maybe one day I’ll come to change, but as I’m sitting here, I don’t, don’t know why it is. I don’t know if it’s cause I don’t like the sound of his voice. I don’t like the nature of his show. I don’t like, and this is all of the guys. This isn’t just Howard Stern.

Those guys are all gigantically successful, but there are people on planet Earth who just don’t like chocolate ice cream, who, no matter how great it is, and I don’t have time, three hours to sit and listen to that show. I also find trying to break it up and do 30 minute clips. I have listened to Andrew Huberman on a couple of things because he deals with things related to the mind and how the mind works, and that’s always an interesting thing for me from at least personal discovery. But I feel like there has to be great value in what I’m providing or otherwise it doesn’t make any sense to do it. I don’t find, like if it can’t benefit the community, then there’s no point in speaking. There has to be some tangible little nugget to walk away with that you could benefit from, or at least it could get you to think, again, teach someone to fish. Don’t give them fish. That’s why I’m so cantankerous when it comes to these services that you subscribe for. It’s because they don’t help you in the way you think it should.

But anyway, we’ll talk about that maybe more tomorrow or the next day. At any rate, I appreciate if there’s things that you’re going through these days in the markets that, that aren’t trade specifics please reach out. I’m happy to cover them to the best that I can. I don’t have all the answers. I have some of them. I’ve lived through the majority of what you’re probably feeling, although I might come to that feeling in a different way than you were or are, but I’m happy to address it if it helps you.

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Do you manifest abundance in your life?

So this is a week of a reality check. And it occurred to me when I think about all these things, like what was it that ever clicked for me? Where I had, I knew I had some, some level of skill. I couldn’t quantify it, but I knew that it was beyond luck. And that was when my mindset changed around money. So it had nothing to do with trading tactics, it had nothing to do with the asset class that I was trading. Again, I came out of an environment that I hated. It was a wirehouse environment. I met some decent people some of whom I’m still in touch with. We were in a part of town called Murray Hill, but the environment was bad. The sales manager was one of these 5’2″ guys with a Napoleonic complex.

He was always sizing people up. The branch manager was an old EF Hutton guy, and you know, he was just checked out. You know, he was just there kind of going through the motions. Money was good. He didn’t have to do much. The branch was known as a training branch. They had a couple of really big producers, but it was a training ground for folks who were hungry, who wanted to make it among them, me. And they were not really concerned about what was going on for the clients. It was always like, Here’s what we can trade 19c-3, here’s what’s on the board for the syndicate. And it was a little disheartening because the people that they championed and that they were really proud of were the people who generated like lots of commissions. They were held in high esteem.

Now their clients weren’t making any money, but the, the brokers were doing “gross,” that’s what they called it, meaning gross commissions. So for those of us who had a conscience, and those of us who actually wanted to kind of create alpha for the clients, because it’s such an amazing and very beautiful thing where someone who’s a hard worker trusts you with their money. Like you really have to think about that. That’s an enormous amount of trust, and it’s not something that should be taken advantage of.

So going back to creating the alpha part, and then as it would affect me, the thing is, is like you have to be ready for the abundance. You have to want it. That should be like when Ed Seykota says “intentions equal results.” Like what’s the intention of trading? There’s probably a lot of things to say around there, but in and around your goals and in your intentions, it should be to increase your own wealth. So when you look at managing risk from that standpoint, it throws into sharp relief the need for keeping losses small, the need for making as few transactions as you possibly can, but also having the mindset and the intention that attaining wealth and growing your wealth is doable.

But here’s the thing – that you deserve it. That it’s part of who you are because of how you act and how you behave. Some people don’t make money trading because they’re just not ready to make money emotionally. They’re not ready for the abundance. So that’s why they find themselves stuck in intraday trading, looking at one minute bars, making 70 trades a day, wondering why it’s not working. In my mind’s eye, it’s because that’s not what affluent people do. So maybe they’re just demonstrating subconsciously that they’re not actually ready for the abundance to come into their world.

So make sure when you look at your goals this weekend and what your intentions are, that front and center is that you are ready for it emotionally, you’re ready, and you are totally up for the abundance and that you’re absolutely deserving of it as a human being.

I’m probably going to slow down and cut my workload, which means I’ll probably start publishing only to the platforms and not having the embedded player on the website. I’ll see what I can do about the transcripts, but you know, I’m getting busier and busier and I feel like I don’t know for sure what the date is, but I kind of feel like I’ve said everything that has to be said. I’m at the point now where I know I’m kind of repeating things or saying things that I’ve already said before, but in a different way.

And I know that’s an important part of teacher teaching. They say a good teacher will have 3, 4, 5 ways of saying the same thing over and over. Maybe I’ll go do videos. They won’t be trading videos that’s for damn sure. I don’t want to be repetitive. I always want to be original and I don’t care about failing. I learn a lot about myself.

So far, the shows here has been good. Unless there’s a deluge of new questions from listeners that I haven’t really addressed before, I’m not quite sure that I have anything new to say. The end might be near, in other words. But nonetheless, there’s a lot of episodes already published. I think there’s a couple of years of daily shows, any number of which you can really sink your teeth into from the conceptual standpoint.

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