Why it’s easy to go on tilt

I’m coming off a nice break – was a little burnt out…okay…though emotionally just tired, burnt out. It’s been a long year working on a lot of cool stuff. So let me give you a little roadmap of how things are going to unfold. Coming up. I’ll probably finish out the month of November. And then as is customary, I typically take off the month of December just because I can. However I build, I’ve been recording behind the scenes some YouTube videos and those will be in two forms. I think we have four or five already recorded with my good friend Shawn, who I’ve known for over 20 years. And that’ll be more on the investing side, what’s going on with the markets just from a historical standpoint, give everybody some context.

So I think it’ll be valuable for both traders and investors. And then for all the email, the reader email that I get, which is rather substantial, I am going to actually record those answers on video with a guy who’s going to help produce or has been helping produce the show. His name is Brandon, his nickname is Ganja, not because he is a pothead, but just because…well it’s a long story, I’m not going to get into it, but he’s a rockstar and he’ll probably be posing the questions to me in a way that I don’t end up forgetting half of what the people write because usually I just answer the question off the first sentence.

And the reason for the switch is pretty simple. These podcasting platforms, Spotify and the rest of them are super helpful in distributing the MP3 digital files to everybody. And Libsyn provides me the player to embed on my site, but not one of them helps me grow my audience. So if I go and try to syndicate through Twitter or Stocktwits or otherwise to expand the show, they don’t provide a lot of help. So then it becomes a function of word of mouth, maybe someone retweets something occasionally. And so if I’m going to put in the effort, then I have, because I have goals like you, I have growth goals, I don’t need to keep doing this. Otherwise it doesn’t make any sense to just keep treading water.

So YouTube has an algorithm that will help suggest this show to other people, which could be helpful because that’s really what is the shot in the arm for me is to meet new people and to get new questions because otherwise I feel like I’ve been just repeating myself on trying to say the same thing in a different way, which I know many of you have written said that’s also very, very helpful. But it’s boring as shit for me and I can’t spend the time doing it if I feel like I’m saying stuff that you can refer to from previous episodes. Because it’s kind of all there.

I wouldn’t listen to an episode because of what you think is a catchy headline, wisdom and everything because I don’t record them for the sake of just recording them. Anyway, back to the show, that’s the update. And then going forward I will probably peel off the audio when you create a video you can actually strip off the audio only and take the MP3 out of the MP4 so to speak – the MP4 being a video file.

And I will probably still take those MP3’s and syndicate them all this and that. As far as embedding the player on the website to listen to the podcast, that’s a big maybe I’d say that’s less than 50/50. And also the transcripts until I can find somebody to help me edit them. And otherwise for clarity and for readability, because I say a lot of stupid things or all those kind of things that don’t make for good reading.

Anyway, I did get an email over the past few weeks from someone who talked about going on tilt, which I’m guessing is because markets seem to be schizophrenic in that they’re up one day down. The other bad news comes out, stock rallies, good news comes out like PayPal and the thing shits the bad. So it’s very difficult to trade in anticipation.

I don’t recommend doing that anyway because trading before earnings is really guesswork despite what you think might be you are having a feel. You can get a feel, but I think deep down, if you have a feel or if you’re guessing right, you have hunches and intuition, you can backtest, backtest this by keeping notes anywhere. I don’t care if it’s in a journal, it’s kind of an overused word journal.

You can go to Google Docs, you can write it on the back of a damn envelope for all I care and then look at a hundred instances and see, well how did things come out? And it’s pretty black and white. You can’t use excuses. Because if you were like, well I was right, but technically this happened, it doesn’t really matter because if you lost money. And so people go on tilt in these types of circumstances because they need the emotional win.

It’s not necessarily about the money. When you get beaten down your account’s in a drawdown, you need the emotional win. So typically what folks do is they get a small win of like $150 and they lock it in just because they need to have the win. Of course I don’t recommend doing that because that’s too small minded and I wouldn’t really recommend anybody trading for $150. It’s not worth all the time you’re sitting in front of the screen. But my humble opinion is people go on tilt because they’re emotionally invested in the result of the trade, not the process itself. So this is where you can take a step back, try to look over your own shoulder and say, what is this person trying to demonstrate here. Because oftentimes it has nothing to do with trading and there’s a million reasons why we’ll cover it on another episode.

But you could have lost your job, you could have quit, you could have believed the hype on some of these jack asses in those funny commercials. I swear to God one day I’m going to do a parody because I’m the perfect guy to do it. [Mockingly] “I made $25,000 last week working only half an hour in the morning and that allowed me to quit my full-time job.”

Please don’t ever do that because you don’t know. A week of trading doesn’t mean anything statistically significant in terms of your ability. If you’ve done that, awesome, but it’s not predictive. And so don’t get crazy and give up steady streams of income and benefits and other types of security until you have a million dollars in the bank. Whereas if at that point you could live a long time without income, don’t think you can do it again.

And this is why people go on tilt, which is the theme is they have their Roth IRA or their 401k rollover is probably a $100k maybe they have$ 25 to $50k in the trading account and they’re like, Well I’m just going to trade full-time and I’ve covered that before in another episode. But what ends up happening is, again, this is what leads to tilt. You feel like you can take that money and trade it and bring in enough capital every month to pay your bills. And what ends up happening deep down in your psychology is you are effectively trading with scared money because you really don’t have the money to lose. Because if you figure, hey, I’m making I got $50k and I have $4,000 a month in overhead, well now you basically have to double your account every year just to tread water and you still got your original corpus. That’s without counting a drawdown and that’s without counting that short term. Short term gains are taxed at a high rate.

So you have to really plan this out and think of what all the moving parts are because then when the trading doesn’t go right, you just get emotionally fed up and that’s when you can start to act out. And when that usually happens it’s not a typically good outcome for you when you go on tilt. So you have to be very, very practical here. And again, focus on the process, not the outcome of any one particular trade. If you’re right, 30, 40% of the time, you know can make a lot of money here. The key is to let your winners run and adjust your stops higher.

Okay folks, good to be back. As always, if you have any questions or things you’d like me to discuss, please email them over [editor at MartinKronicle dot com]. And then if you haven’t already gotten a copy of the audio book of my book, The Inner Voice of Trading, you can get it for free at the website top right corner. Thanks for listening folks, and I will see you tomorrow.

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