Taking Trading Flyers Leads To Revenge Trading

Hey everybody, it’s Michael Martin. Thanks for being here. Please take a minute and like and subscribe and click the little bell thingy. As Ganja likes to say, today, I want to talk about the caustic aspect of you taking flyers. I spoke with someone who had done it. We kind of unearthed why they were doing it, and there’s some general truths to it. Your approach to taking a flyer in a trade can come from many, many sources, but one of the main truths to the whole process is just that originating trading ideas is hard. It takes a lot of time, it takes a lot of work, and when the outcome is uncertain to even all of that work, folks are always looking for a shortcut or some kind of a hack. In my experience, they don’t exist despite marketers being able to kind of come up with a new hook that would increase your curiosity to want to take a chance.
But ultimately what they’re looking for, as I’ve mentioned before, is subscription income. They want to get a hundred thousand. Who cares what the number is? Subscribers paying a number every month, that’s pretty much guaranteed within say plus or minus five to 10% because there is churn. People drop off, new people sign up. That’s considered churn. And so what ends up happening for you is you’re trying to hijack the system to avoid doing harder work. And instead of maybe admitting to yourself that for this particular moment in time, and it could be just for a day, all the charts that you normally look at aren’t showing you anything that you would trade either. There’s no chart pattern that you recognize, or hopefully the one chart pattern that you’re using or the one setup and it doesn’t exist. And so instead of saying to yourself, my job is to play superior defense, and if there is no trade on this particular date, then there’s no trade.
I sit on my hands, I don’t do any trades. I’ll come back tomorrow or Monday to see how it would look. That would be the mature thing to do, but instead, folks are like, man, this other trade over here is up and down 15 bucks a day, but it’s not my trade. I feel like I’m missing out on something and I have the strong emotional need to participate because after all, executions buying and selling means trading. Obviously that’s not the case, but that’s the mindset. So you put yourself in a spot where someone mentioned a trade idea to you, the upside potential probably, and then you find yourself in a trade, and what are you supposed to do at that point? Take the flyer and manage it as if it came on your wishlist somehow. What criteria do you use to enter? How do you manage the trade? Most of the times folks don’t even know. And then you’re sitting there saying, why am I even in this
Trade? Especially if it goes against you, especially if it goes against you. And I ask you before you try to take a flyer, ask yourself, what’s your edge? Because again, if you’re going to get professional style results and act consistently, you have to know what your edge is and then know how you can perform on that edge tactically for each and every trade that you want to put on. So much so that if you can’t define your edge, then there’s no trade. But sometimes people let their emotions get the best of them and they put on the trade because they’re desperate for a good idea. Maybe whatever they’ve been working on hasn’t been working, and so they want to delegate the decision-making process or all the hard work that goes with that, coming up with and originating a trade idea to somebody else, thereby hijacking the system.
The problem is is that as you have been trying to create alpha, right, your trading system is a function of who you are as a person. It’s not just a bunch of math. Yes, there’s math involved, but you are the alpha, I guess is what I’m saying, your makeup, your understanding of risk, right? Or lack thereof. There’s varying degrees of risk. How do you add to your winners, which is something I think everyone should look to do, or at least understand how it could impact their trading and better define what the trading edge is. You can almost do that weekly, certainly monthly, review your trades and see does your edge still exist? It can be modified, the markets will change, and so we don’t want to end up taking flyers for excitement or because we feel bad that our own hard work hasn’t yielded the results.
Don’t wave the flag now and surrender. Stick to your discipline because again, playing superior defense is the name of the game. You don’t want to find yourself where you’re trying to harvest ideas from newsletters or discords. You hear what goes on in those. I mean, you got to pay a monthly fee for people telling you that you know, got to let your winners run. It’s like, I can’t believe people were even paying for that kind of sophomoric wisdom at that point. If you need to be in a discord to kind of hear that, you might look to see like, are you being codependent? Again, I’m not a psychologist, but you can’t really trade somebody else’s rules. You have no emotional connection to them. Even if you’re a purely systematic trend follower, you have an emotional attachment to your rules, right? No one escapes. This is par for the course. This is a matter of how things work in the trading world. So make sure you understand why you’re in the
Trade in the first place and understand why it’s important to not put on stupid trades like flyers and risk your capital because you could be acting out. You could be also saying that you just don’t even care about the quality of the money in your account. One of the things you can do to help improve your own outlook, maybe even improve your performance, is to put a different quality on the money. Some of you approach trading and you’re like, well, okay, this is MyFu money. I don’t care what happens to it. And that’s why you get the results that you get if you don’t make it prominent and very, very important to yourself. In my humble opinions, be very, very hard to grow that money to a significant level. If you just think of it as cash, you’re throwing around for the sake of doing it to see what hits like for fun or entertainment.
So one thing you can do is decide that the money is going to be more a supplement to your kids’ Section 5 29 college savings plan, or maybe you’re going to be, even though it’s taxable, most likely I’m going to enhance my retirement with this money, or maybe I’m going to grow it and then buy myself a gigantic insurance endowment policy so that I can give money away upon my death, or maybe I’m just going to grow it so that I could both live off it and put it in a trust in a charitable remainder trust. Let some folks live off the money and then when that person dies, it’ll go to the remainder men. So there’s a million things you can do if you just open your mind, but trading for excitement and winging it tells me that you don’t care about the money, and if you did that with my money, you’d get fired.
So then you have to say to yourself, what kind of standards are you holding yourself to? Because then what happens? The big pink elephant, when you start doing that enough and then that doesn’t work. So when your own research and trading stuff doesn’t work, your chart books and what have you or your discords are failing you, which they tend to do, and then the flyers don’t work, now you’re pissed. And then what happens? You got it revenge trading because now it’s just a fuck all at this point, you just don’t even care. You don’t care about what you’re doing. You don’t care about what the outcomes are. And then you have to say to yourself, would you trade like that if I was sitting next to you, for example?
And what do you get out of it by going on tilt and why isn’t it okay if you take a couple of days off because whatever it is that you’re looking for in the market isn’t showing up. So if that’s the case, why don’t you try to pivot and say, maybe I need to try some new securities. Maybe I need to try a new trading style. Maybe I need to learn to hold overnight and trade smaller and expand my universe and get out of whatever it is that you’re trading. For example, it might be the universe trying to communicate
You and push you along and give you big hints along the way. It gets deep. You can certainly think about it and come up and be bold. Be very creative with what you think the solutions might be, because when you get to that creative solution, and I’ve heard various coaches say this, write out 20 different ways that you think you can make money in the marketplace as opposed to being emotionally invested in one thing that’s just not working for you. Because if it’s not working after three or six months, to me it either means the strategy’s not working or you don’t have a good feel for what that strategy is, and it doesn’t say anything about you as a person. Did you ever know somebody who was really, really good playing baseball, but they sucked at football or basketball? Did you ever know somebody who was really good at golf but couldn’t play a team sport?
So it doesn’t mean anything. Everyone has their skill. Everyone has their way to create the alpha, and your job is to figure out what that is, because then once you do that, it’s not going to seem like work. It’s going to seem effortless. And then once you get to that spot and you know what your tactics are and what setup it is, what single setup it is that you’re looking for, the modifications become small. They become very, very small from period over period. Now, if you’re trading equities, you could look at international stuff, even if you’re trading futures, you can look at, get out of trading coffee, sugar, cocoa cotton, and look at metals. And if you’re doing metals and they’re not working, look at currencies that expand your horizon. But I would do that before I would start taking flyers on other people’s rules because you don’t have any emotional connection to the why.
Again, if you’re watching TV and someone says they like United Healthcare, who the hell cares? What are you supposed to do? How do you position size? Where do you get in? When do you know you’re wrong? You have to be able to answer all those questions by yourself. No one can tell you that. And if you’re in a discord saying, is this a good time to get into the einy? You’re in the wrong group, or You’re satisfying a need that has nothing to do with trading. You see what I’m saying? So I want to leave you with that. It’s been a good week. I hope you have fun plans for the weekend. Again, please like and subscribe, go to Martin Chronicle, get your free copy of the audio book version of The Inner Voice of Trading. Have a great weekend, folks, and I’ll see you Monday.

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