So I got an email from someone saying, “Hey, I am very, very frustrated. I have my list of securities and I’m going through my setups and da, da, da, da, da, and nothing is working” and this happens to a lot of folks when the market turns, they find that their strategy, although it’s profitable, the majority of the time, there are moments in the year when the market is not amenable or not cooperating. You think the market would have a common courtesy to work with you, but no, it has to be difficult.
See, the market is omniscient and all powerful omnipotent, I guess, is the word. And I remember at this moment in time, the phrase that speaks about Buddhism and how people are their cause of their own suffering. So anyway, I wrote him back and I said it’s hard to tell anything from what you’ve written, can you feed, can you fill me in a little bit more?
And he said, “Yeah, I’m looking at the SPY the QQQ and the, whatever it is the IWM, which is the ticker for the Russell 2000, they’re all ETFs.” Now you could trade futures on these too. And I said, I know what the problem is without even you saying anything else. And that is, those are very, very correlated. I mean, the there’s a 99% correlation between the QQQ and the SPY.
So if you can’t find the setup, that’s going to work for the EM or the SPY because all those markets are correlated. You’re likely to just move on to other instruments that are basically effectively the same flavor. So you have to look at asset classes that aren’t correlated. If you want to try to trade across all the seasons of the year right?
I know you might see videos of guys who have made a lot of money using one ticker, but that tells me one of two things. One is they got really, really lucky and they put the trades on when the timing was good – which is out of our control, but more power to them. Right? We’ll take good luck. I will too. The second one is that they might have been trading too big and got away with it to make all that money in a short window of time. And they were smart enough to sit on their hands before they gave it all back. And the third one was maybe something that they didn’t mention was that there was extended periods of time when things just didn’t work out. And there were dead spots in the trading year and hopefully they knew enough to sit on their hands or not throw good money after bad or this and that. So look, someone could make 200% trading in three months and not do anything for the rest of the year, call it nine months. Right. They don’t have to be like January, February – pick any three months. It could be April, may, June. They did very well.
And then every other month, but like January through March and then July through the end of the year, nothing happened, but they still made 200%. Like that’s how it might look. So just be careful that you have to look at the details of how everything unfolded. I don’t begrudge anybody there success, but there’s always more to the story just because you have monitors and, and real time quotes and fast hot keys and this and that, that doesn’t mean anything in terms of profitability. It might feel emotionally that you have more control, but that’s a mistake because I don’t think you have control. The best you can do is enter your trades. You know, using buy stops, maybe limits. If you’re trading size, if you’re trading one contract, don’t worry about limits. You know, you can take the slippage in the skid and if your account is too small, or if you, you say it another way, if you’re upset about slippage and skid, it might be that you’re underfunded.
So that’s just something you’re going to have to live with, because it’s not going to change for those of you who have larger accounts, you know? Yes, you can put in limits to, stop or eliminate some skid. But the trade is really, really good. The slippage is not going to cost you that much. So think, I think if you’re a very active trader you might want to take a look at that and study and just see what is the negative impact of trying to put on so many trades to your actual performance. Whereas if you sniper down or filtered them once or twice more you’d actually save a lot on commissions and the slippage. Most folks don’t want to do that, but anyway, we’re getting off topic. The key here is to choose names that are not correlated so that you can trade.
If that’s your, if your goal is to have action every day, then you have to look at a very promiscuous list of instruments in order to trade those markets. And that’s presuming that you’re long, only if you’re a short seller, then you can do that too. I would just advise like, again, go back to last week that you don’t have to trade every day. The markets will be here tomorrow. They’ll be here next week. They’ll be here next year. They’ll be here. So there’s really no reason to have any type of fear of missing out and the markets aren’t going anywhere. And the key is to control yourself anyway, things. Thanks for being here. I appreciate all the feedback. You can subscribe to the show we’re on Spotify, YouTube, all these different places. I don’t know again, why people listen to podcasts on YouTube? It’s beyond me, but I ain’t that bright in many ways. If you’d like a free copy of the audio book version of the Inner Voice of Trading, you can get that for free at MartinKronicle. Thanks for being here. Folks. I’ll see you tomorrow.
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