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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: June, 2020
Jun 30, 2020

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You can spend weeks stalking a chart and have the set up work perfectly, only to have the name reverse, sometimes in the same day.

You put all this work in and the name doesn't have the common courtesy to go up...

How do you feel about that?

For some of you, it can lead to disappointment or anger.

If that's the case, you can sometimes become derailed and trade on those emotions - whether you have systematized rules or not.

It's important to remember that we are guests at the market's party and we're lucky enough to be invited in the first place.

False breakouts and reversals don't care when you get long.

Sometimes the market is not amenable to your trading style.

It has nothing to do with you or your ability so you might consider not taking it personally.

Click here to get your free copy of The Inner Voice of Trading audiobook.

Jun 29, 2020
It happens from time to time that you make a huge win.
 
You should celebrate it and understand that they don't happen all the time.
 
Many traders will intuit that they are "on to something" and without any thought, start to trade larger.
 
They also start trading names or asset classes outside of their core ability.
 
Plan to grow methodically and not get to invested in the hubris that we can feel after large wins.
 
Someone a lot smarter than me said "pride is a big banana peel."
If you stick to trading a fixed percentage of your assets, you'll be fine.
 
You can condition yourself to feel the same about all your trades - you're just following your system.
 
Jun 26, 2020
What does trading mean for you in your life?
 
What do you want your money to do for you?
 
When you know the answer to some of these type of questions, figuring out the best asset class and trading style will be easier.
 
Know and master yourself first, then figuring out the trading part is much easier.
 
Jun 25, 2020
Attitude is the one thing that I can't teach you.
 
I can help you change your paradigm and that in turn can help you have a good attitude.
 
However, you're going to want to do the work.
 
Sometimes attitude can carry you when nothing else is working.
According to General James Mattis, to the "USMC, attitude is a weapon system."
 
Think about that for a minute...
 
How do you think you can use this information as you manage risk? 
 
Jun 24, 2020
If you know someone who trades across asset classes and trading styles, they are likely gambling.
 
A person becomes the casino when they stick to one asset class and one style of trading, and get that down cold.
 
Making predictions, fading the Fed, and fighting the tape are all examples of gambling.
 
Tell them to keep their opinions to themselves and focus on getting good at one thing, and grow from there.
 
Jun 23, 2020
Many traders learning the craft are governed by the need for success for public purposes.
 
Some like to peacock.
 
Some are just flat-out greedy.
 
You'll make a more progress sooner if you're clear about what your motivations are.
 
In the end, consistent behavior predicts where you end up in life, not throwing around size trying for hero trades.
 
 
Jun 22, 2020

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A trader can gun for 100% RoR, but at what cost?

You need to conjugate what you're doing with risk (and time).

Your open trade equity shows allocators the risk that you're taking for the returns your endeavoring.

Most allocators are looking at daily vol and risk-adjusted returns.

If your ethos is to chase hero-sized returns, you have to know that those are often a result of good timing.

And if you continually trade too big, it will catch up with you - it's just a matter of time.

Slow and steady wins the race.

Know what you're trading for.

Click here to get your free copy of The Inner Voice of Trading audiobook.

Jun 20, 2020

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Commodities are cyclical whereas equities are secular.

You can take advantage of that cyclicality by trading seasonally or by trading commodity spreads.

When you combine that with good risk management and maybe some trend following tactics, guess what happens?

Click here to get your free copy of The Inner Voice of Trading audiobook.

Jun 18, 2020
 
Alan "Ace" Greenberg had a great rule that he mandated on the Bear Stearns trading floor: "If the name is down coming into Friday's close, it trades."
 
He didn't wait for stops to be hit.
If the prop trader was long and there was an unrealized loss, they sold it before the close on Friday.
 
This simple, but brilliant rule is one that you might want to employ.
 
By selling your losers and going flat, you have a clear head that night and the rest of the weekend.
 
Life is good.
 
 
Jun 17, 2020
 
Things don't always go as planned.
 
Give yourself some room to expected the unexpected.
 
This is the best way to hedge against your blind spots for which you have many.
 
 
Jun 16, 2020
Your sole purpose in life is to play superior defense.
 
Where do you think you can express that ethos the best?
 
 
Jun 15, 2020
 
Nothing happens randomly.
 
You decide that you want to trade voluntarily.
 
Whatever happens after that is your responsibility regardless of the outcome.
 
The best traders I have known over the years are the ones who live in a paradigm of personal responsibility.
 
Let go of judgment of yourself and others and focus on risk management.
 
That's what traders are at the end of the day - risk managers.
 
If you don't manage risk, the risk manages you - and it's your fault.
 
 
 
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