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Trader Mindset

Michael Martin is a trader and instructor. His show deals with the emotional and psychological aspects of trading and managing risk. His book "The Inner Voice of Trading" and features interviews with Michael Marcus, Bill Dunn, and Ed Seykota - who also wrote the Foreword. Get the audio book free at MartinKronicle.com.
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Now displaying: Page 1
Jan 10, 2018

Gains look like gains only to the extent that you keep your losses small. 

Most traders lose and quit the business in frustration because they are underfunded, focused on short-term time frames, and trade to large for their capital space.

You can gear your target RoR for a high number, like 100%, but you'll also have to endure a drawdown of 40-60%. 

I'd focus on consistency in your approach and your discipline. That is what you bring to the table that amateurs cannot. If the average person could act consistently around managing risk, there'd be no need for portfolio managers. 

Risk-adjusted returns are the key to getting an allocation. Sure you can get big returns, but at what risk to the operation? Anyone can roll the dice and hit it big once or twice, but that's not how to build a business. Those type of results appear from random luck, not a bankable process that can be repeated like a robust trading system that can be deployed across many markets. 

This podcast episode was inspired by a great email that I got about one particular trader's performance and a few of his discussions with "prop trading desk managers" (read: brokerage).

There aren't many prop trading firms out there. Most are brokerage masquerading as prop trading. True prop trading is a firm that will give you funds to manage WITHOUT your needing to deposit your own funds because you are talented. 

If you want to trade your own capital, wait 6-12 months and see if you've developed a sense of trust with the firm. Making a deposit to an account makes you a brokerage firm client, not a prop trader. 

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