Why your biggest gains might not be your best trade

Hey everybody. Michael Martin, thanks for being here. Got a ping from someone about listing your best trades in your worst trades. And so ganja and I actually did an episode on that, talked about it. What most people think about is their biggest gain is that their best trade and is their biggest loss is at their worst trade. Not always right. Sometimes you could be in stuff and there’s just good news announcement thing blows up. You make a ton of cash for reasons you didn’t even know, but you’ll take it. Same thing on the downside. So when I think about this, and I certainly know after whatever, 30 something years of trading where some of the milestones are, they don’t have a lot of value looking back because you can’t sit there and talk about glory days, right? Bruce Springsteen sang song about glory days, it’s over.
It’s in the past. Doesn’t necessarily help you even trade here today in the ever-evolving moment of right now. So what I tend to do is not even think about that stuff because so much of it is good luck, bad luck, good timing, bad timing. My analysis is largely the same on every trade. And so what I do is I just try to say, okay, how can I perform consistently? And that’s really the message here, is that if you look at a bell curve and you say, okay, on this end of the bell curve is where your big losers are on this side of the bell curve, when you look at the normal distributions, where your outliers, your winners, your big winners are, when you think about everything within one stand, the deviation of the mean, that’s where the majority of your behavior’s going to come in.
And I know folks who’ve done very, very well just hitting it straight down the middle, right? So think about, I would let go of the best trade career trade kind of a thing because it’s a maturity thing. Let that go and fill your days with concern about can you behave consistently day after day after day after day after day, right? Because if you’re not running a systematized set of rules with a simulator that will help you calculate your orders and adjust your position sizes and calculate your entries and your exits, you’re a discretionary chart reader. So that makes it harder because every day you have to kind of think by the seat of your pants and go with what you think you know how to do. That might be a certain type of setup, might be a certain chart pattern. It doesn’t matter to me.
It’s all legit. It’s all works. But your goal is to obviously make sure that you find a set of rules with which you’re compatible. Those rules have to have positive expected value, and then to the best of your ability, screen the universe so that you know can put on those trades where you affect your edge each and every day. And if you can’t, you sit on your hands. That to me is the most important part of the trading, is your consistent behavior where the numbers fall afterwards to a great degree. We’re all powerless over that. So I wouldn’t lose a lot of sleep or fre about not having what you think
Is a career day or a career trade. If you’re in the game long enough, I promise you it’s going to happen. Don’t know where, what, or why or how it’s going to happen as I didn’t know it for me either. It just happened. And so focus on what you can do day after day after day and just stick to your knitting, because that’s really much more predictive for your career than any one particular day, even if you made a hundred percent in a day, right? So that’s it folks. Please like us, subscribe to the show. Leave a comment if you want, and if otherwise you can suggest a topic, I’ll be happy to get to it. Thanks very much for being here, folks. I’ll see you tomorrow.

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