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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: October, 2020
Oct 30, 2020
Set your goals around processes that you can replicate day after day.
 
Setting a goal around an object is passionless and not inspiring.
 
It's your behavior that predicts where you end up in life.
 
Oct 29, 2020
Another good reason to have orders to add or remove risk - surprise announcements.
 
Oct 28, 2020
Sometimes markets jump for unexpected reasons.
 
You can have an order sitting above the market to liquidate your position if the market goes parabolic.
 
Oct 27, 2020
Looking at the chart is just the beginning.
 
It's not the map you think it is.
 
Oct 26, 2020
From time to time, names you're watching will move sharply before you have a chance to add risk.
 
That means missed opportunities.
 
Names that you're already in will move against you - also before you have a chance to act and keep your losses small.
 
Then you're stunned and frozen and you begin the process of negotiating with yourself.
 
Either way, you're losing and there's not much to say about it despite your reasoning.
 
If either of these scenarios sounds familiar, you can use Stop orders accordingly to hedge against such moves.
 
Oct 23, 2020
Frustration is the appetizer to a meal called despondency.
 
If you are unwilling to feel the feeling of frustration regularly, you invite stronger feelings in the future.
 
Use regret to help you make better decisions today.
 
If you want to be a professional PM or trader, losses are a part of the business.
 
Oct 22, 2020
When bad news hits the tape and the stock doesn't sell off, you have a good long trade with more room to go.
 
Oct 20, 2020
From time to time, you might find an equity that traders and investors are betting against, but they prove all the naysayers wrong.
 
If that stock has high % short interest, and it starts to trend higher, you have the potential to penalize the naysayers who will all have to pay you to cover.
 
Look for high short interest and uptrends.
 
Oct 19, 2020
Great traders are using technical analysis to protect their capital which is job #1.
 
If you know your risk, the entries are not that important.
 
Most amateurs focus on the wrong things for several reasons.
 
They don't have solid goals, they are too short-sighted, and they are not friends with their feelings.
 
Oct 16, 2020
When you're doing well, ask for more money to manage.
 
Ask for a free Bloomberg.
 
Ask for forgiveness of desk rent or fees.
 
Ask for a higher payout on your trading profits.
 
If you don't ask, they own you.
 
If you don't ask, it's knot going to just show up.
 
You have to ask for it.
 
Make your case and have confidence in yourself.
 
Oct 15, 2020
Bet size determines what you make and lose.
 
How did you come to decide your current bet size?
 
You probably guessed and just chose one.
 
You can use Kelly Criterion to figure out the best size after hundreds / thousands of trades.
 
Oct 14, 2020
Sidestepping the large losses will do wonders for your P&L and also build enormous trust between you and your clients.
 
They've already lost a great deal of money on their own or with another manager.
 
Admit your wrong and get out.
 
The client will forgot your being wrong about a name over time, but they will not forget a 40% hit.
 
Oct 13, 2020
Using Relative Strength for stocks and seasonality in commodities are about as far as I'll go in talking about what you can rely on.
 
Most others are unreliable as stand-alone indicators.
 
If 'price' is the input, the indicator only helps you see or confirm what you can already see in the price itself, so just use the price.
 
Oct 12, 2020
You are programmed to behave the way you behave and that makes the results you are getting in your life predictable.
 
The mechanical part of that is how you allocate the funds you manage.
 
You can also backtest running several systems at the same time.
Yes, you can do that...
 
Oct 9, 2020
Don't worry about what it looks like.
 
If you keep your mouth shut, you won't have to worry about what everyone else will say when you slip and get up.
 
They don't slip because they don't have the b*lls to do what you do and take chances.
 
They also stagnate and don't grow.
 
Stay away from these losers.
 
Oct 8, 2020
Just give the money away ahead of time.
 
At least you can steer it to a cause you care about, not a winning trader.
 
Oct 7, 2020
This includes turning off the tv and having silence.
 
If you're lonely, you know what you can do...
 
Oct 6, 2020
When brokerage masquerades as prop trading: be careful for what you wish for.
 
Oct 5, 2020
Some traders succumb to buying services and research, or worse, chat rooms.
 
Traders need to be self-contained units.
 
All the decisions that go into a trade need to come from a goal that you set for yourself and one that you have a deep emotional connection with.
 
Traders are leaders and need to be decisive.
 
Subscription newsletters don't teach you to manage risk.
 
Oct 2, 2020
You are programmed to behave the way you behave and that makes the results you are getting in your life predictable.
 
In order to change that - if you are not satisfied with your results - you need to change that programming.
 
I've seen people that you would otherwise count out make enormous strides in their lives and attain great success because they got clear and set goals, eliminated non-productive activities, reset their paradigm, and executed day after day.
 
When you focus on 'process' you will get the results you want.
 
If you focus on the results first, it is also predictable that you will lose interest because you have no emotional attachment to what you're doing.
 
 

An example of this type of mindset is setting a goal such as making a certain dollar amount from your investing or trading.

The goal should be about attaining that dollar amount from the result of specific behavior - the behavior is the goal - not the dollar amount.

And when you attach a powerful emotion to your behavior, the odds of your hitting your goals change to greatly in your favor.

You can achieve the success you imagine if you want to - it comes down to relative strength.

The question becomes "are you going to be remain uncomfortable sitting in your current dirty diaper getting the results you think you don't want," or "are you going to be uncomfortable making the changes you want?"

You get to choose what type of discomfort you want in your life.

"And the day came when the risk to remain tight in a bud was more painful than the risk it took to blossom." - Anaïs Nin

Oct 1, 2020
In order to affect the change(s) you need to make, you need to get out of your comfort zone and create new habits around that behavior.
 
From what I've read, creating a new habit is going to take approximately 2 months.
 
Take it one day at a time. Next thing you know, you'll have a week of new, more productive behavior behind you.
 
Of course, you need to have a plan that you are emotionally connected with to drive you.
 
Reach out if you're having trouble getting connected to your goals.
 
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