Why you need to use stops not alerts

Hey everybody. It’s Michael Martin. Thanks for being here. So today I want to talk about what I mean by not sitting in front of the screen all day. And that is the pros have a plan. They know exactly what they’re going to do and how they’re going to execute. Doesn’t mean they’re going to get ’em all right. That’s for damn sure. But you have to go into the day with the confidence of knowing what you’re going to execute. You can’t figure that out on the fly. That’s why so many people lose money, I think is because they’re going on gut shots when they really don’t have that muscle really evolved yet. They’re too new. Now, if you listen to folks who are trying to run these day trading chat rooms, they’d make it sound like everything that you’re doing is wrong.

If you’re new to the game, I don’t think you should be spending the day sitting in front of the computer. I think you should work after hours when the market’s closed and it will reduce your urge to do stupid things. Have a plan, know what you want to try, even if you don’t have any experience, put the trades on and then go away. Also with that is this other thing that’s drives me nuts. And that is don’t put in your stops because they’re going to get run market makers, this and that. That’s a fallacy market makers. Aren’t looking if your stock is going down and you’re long only, and you put a protective sales stop below the market. Why in the name of God’s green earth would a market maker want to buy something that’s going down? Think about that for a minute. So that whole like, “oh, they’re going to run the stops…” What, who, who wants to have inventory of a stock that’s going down?

So again, you listen to these people and I think you’re getting bad advice. Hopefully I can hit enough of these issues here so you can hear the truth. Yeah, sure. If you are new to the business and you have to keep your computer on some people and they have enough orders, put an alert in when the security is like whatever 50 cents within 50 cents of where the stop is. But man, if you have a $5 stop in and the thing is down $4.50 against you, what are you waiting for? Right? Because the good trades make you money right away. That’s my experience. You’re buying with the buying momentum. Other buyers are jumping in. Then over time they tend to support their positions. If you buy something and you start losing money, you’ve got bad timing. That’s what that’s called. And after a few ticks get out, but it’s, it’s not logical to not want to put in protective stops because you think someone wants to run you and force you to take a loss.

I look at this two ways. One, if the thing’s going down and you have a stop, that’s good thing. You should celebrate that because limiting your losses is the name of the game. You’re going to be wrong 6, 7 times out of 10. And so you’re going to want to make sure those, those stops get hit. And when they do you celebrate them, you love those stops. You really should fall in love with them because they’re the sentry to your equity. They’re standing guard saying “Once the security goes past this price, we’re getting out” and that’s it. There’s no negotiating. So I would encourage you to do that more than enter alerts, right? If you do phone executions, maybe you put in alerts, right? Cause you have 10,000 shares and you don’t want to put that up on the screen. So you’re picking up the phone and you’re calling your trades that way, asking someone to work in order. My guess is the newer folks aren’t doing that.

And the newer folks with less than $10k, shouldn’t be having thousands of shares of an order, because that means you’re buying dog shit, penny stocks, which you shouldn’t be doing either. So I, I don’t know who started these types of rules, but they’re not based on anything that’s smart from a business standpoint. And those rules don’t really serve you if you’re overseas and you’re not looking and regular trading hours for you is nighttime or 3:00 PM where you are living. And they run into the, to the late evening. I would still put in your protective stops, because this way, if you fall asleep or the day doesn’t unfold the way you want it to, the last thing you want to do is be stuck in a situation in your personal life with young kids and know that you don’t have protective stops in.

So I, I think that information is a disservice to you because it goes against the grain of really smart people and how they run their money. Right? Again, all these little things add up to why I think you should stay out of chat rooms. You have amateurs out here trying to give professional advice and they don’t know their ass end from a hole in the ground. Anyway, that’s coming from a friend of mine in Southern Spain, wanted to reach out and say hi. That’s all I have for you today. Folks, I’ll see you tomorrow.

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