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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 29, 2018

We all run two systems: our trading rules and our emotional rules. I think making money over the long term is about being a master of both systems. In the short run, your trading rules can benefit from luck. 

Our habits or paradigms really tell us what we are feeling on a deep level and steer our behavior, and our behavior predicts where we end up in life. 

I think this is why you can know some really smart people but they can't trade. Two, it can be tied to why some can make money but can't keep it. It's absolutely why anyone can learn to trade, but few can actually do it. They aren't built the right way emotionally for the profession. 

Bull markets reward even the worst systems with net long exposure, but when the markets turn is really where the money is made so to speak.

How does your trading serve you in that regard, because sometimes people trade for more than the money. They think they want the lifestyle because they see the outward expression of the results without fully understanding what it takes to get there. 

If you're not getting results that you'd like, you're likely going to have to change your behavior, perhaps more than your thought process. 

If you believe that humans are pleasure seekers, you might believe that we do what feels good. Therefore, changing might not feel good until it becomes ingrained and habitual. In order to develop new habits, you have to subscribe to massive repetition and consistency. 

What are you willing to NOT do to improve your trading results? Sometimes it's removing a factor or parameter that helps you get the outcomes that you want more consistently in a probabilistic endeavor such as trading.  

Here are some good questions to ask yourself:

Can you stop daytrading or short term trading to make room for longer-term winning trades?

Do you feel like you're in greater control by trading more frequently?

If that's your belief system, and you're not making money, would you say that your need for the feeling of control is greater than your need to become a successful trader? That is true for many an aspiring trader because they haven't felt the feelings around what being a successful trader is, so they have no after-the-fact or "a posteriori" knowledge. Are you willing to let go of those feelings around control to evolve into something more than you are now? This is what I mean when I speak about 'surrender' - I'm not talking about giving up, but pivoting. 

What does it feel like to make decisions with uncertain outcomes based upon short-term random data? 

The more you can live with the uncertainty, the more money you'll make. Think in terms of increasing the odds or probabilities. 

 

 

 

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