Info

The Michael Martin Show

Michael Martin is a trader and instructor for MartinKronicle. His show deals with the emotional and psychological aspects of trading and managing risk. Martin's own book is called "The Inner Voice of Trading" and features interviews with Michael Marcus, Bill Dunn, and Ed Seykota - who also wrote the Foreword.
RSS Feed Subscribe in Apple Podcasts
The Michael Martin Show
2024
March
February
January


2023
December
November
October
September
August
July
June
May
April
March
February


2022
November
October
September
August
July
June
May
April
March
February
January


2021
December
November
October
September
August
July
June
May
April
March
February
January


2020
December
November
October
September
August
July
June
February
January


2019
March
February


2018
November
October
September
August
July
June
May
April
March
February
January


2017
December
November
October
September
April
March
February
January


2016
December
July
June
May
April
March
February
January


2015
November
October
September


Categories

All Episodes
Archives
Categories
Now displaying: Page 1
Jan 12, 2018

The duration of your drawdown is "how long" it takes you to get back to the previous high. It's one thing to be down 10%, but how long will it take you to recover?

If your losses are "in model" there's no reason to panic. You can get this information from backtesting your rules in a simulator. If you are trying to read charts, you're out of luck because your activity is based upon guesswork. 

While you're enduring a drawdown, your instincts might lead you to begin trading more frequently. 

Greater frequency of trades doest not equal greater opportunity. Most trades are suboptimal so I think you'll do better in any case by trading less.

Your instincts might also lead you to "investigate" a new trading methodology to "overlay" on your existing rules, such as option selling because it brings in "revenue." You can lose your a** selling options. 

Behave consistently as you would when you're up 20%. All you do is follow your rules. Take it one day at a time. 

Meditate on how you feel when you have to be patient. You might feel anxious, depressed, angry, and frustrated to name a few. I don't believe your can overtrade your way out of a drawdown. 

You may also consider trading a larger position on something that you are "sure of" because "...if it only goes up 10%, I'll be back to even." 

"To every thing there is a season, and a time to every purpose under the heaven" - King James Bible

Your trading rules might be "out of season" with the market. If you're a commodity trader, you know those markets are cyclical - so no surprise there. If you're an equity trader, sectors rotate so your winners will ebb and flow in secular markets. 

You will go much further as a trader if you understand that losing money and drawdowns are not a reflection of your ability to create alpha as a trader. But how you handle losses and drawdowns emotionally and behaviorally will provide you and others insight on your managing larger sums of money. Investors and allocators need to know you can be trusted.  

 

 

 

 

0 Comments
Adding comments is not available at this time.