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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
Nov 2, 2017

Be open to learning new things and new ideas. They can lead you to garner insight on your trading.

We make our money as traders in position sizing. I use position sizing to be analogous with risk management. I can always move my entries and exits to accommodate my trading size.

It’s the effect of volatility on my position that determines my open trade equity - which can be positive or negative.

If the dollar-volatility of the instrument you’re trading is large than your risk unit, you might have to pass on that (and several other) instrument. If the daily vol on a gold contract is $4,000 and you only want to risk 1/2% on a trade on your $200,000 account, gold is too volatile for you to trade.

If gold’s daily vol is $40, then the dollar volatility is $4,000. You can change that. Trying to trade gold within the range of the normal vol and only risk $10 per ounce will likely get you stopped out for a loss much more frequently as the vol is non-directional and random on any given day. 

You can't change the vol anymore than you can change someone's personality or behavior. 

Free audiobook - Listen to your Inner Voice

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