Hey everybody, Michael Martin. So I got another great ping the other day from via email and said, you know what, Mike? I was reading and listening to the audio book version of the Inner Voice Trading, which of course you can get for free at Martin Chronicle. I said, can you talk more about compatibility? Because that really could mean a lot of things to a lot of people. So I was like, okay, compatible kind of means compatible. But I can try to break that down and talk about that as it relates to your trading rules and this and that. So first of all, trading rules, trading system trading tactics. In a lot of ways, all of that stuff is kind of equal because it becomes you have to operationally define what you need that because there are some folks who run simulators and that’s what they do.
They just trade data comes in, they hit go, the engine spits out the orders. So there’s discipline involved for the work that has to be done. The calculations are done by the machine. There’s no questioning or overriding of the system. Those orders go in. So that’s one process. Reading through a chart book could be your own, could be one you subscribe to, certainly is another way. You need to use your discretion as to when you would get in or what your prices would be, this and that. So that’s another style. Then there’s the screeners that you could use. Could be something at bar chart or finance. There’s Market Smith. There’s a million of them out there. I don’t have a preference. I don’t typically do endorsements, but so that’s another way to kind of screen. Then you have to again, go through the process of making that decision.
And so ultimately people tend to do that and migrate towards the parts of them that feel good. We’re pleasure seekers, so we want to do things that make us feel good. Compatibility, meaning, you know, can get along with another person or another process or something like your dog or whatever. I don’t know. But the takeaway from me on that, when I go back to using that as a say, the thesis for my book, is the goal for the traders to develop a system with which she or they are compatible? No, that’s not necessarily intellectual. So compatibility is a feeling tone. I think I use that expression a lot. It’s like in music, in study jazz, there’s 12 chromatic notes. You could play pretty much any note over anything. The question is, is that tone compatible with where the rest of the song is going at that moment in time?
And in jazz, there’s kind of like no mistakes because the improvisation, you can look at it and say, okay, well he chose that number because it was shocking or because it fit in, or he did it the way he bent the note or the way he sustained it or the way it was played softly. So there’s all that little nuance and I think that nuance comes into compatibility. There’s parts of your process that you probably really like. There’s other parts that you know have to do so that you like them because that’s what pros do, right? Yesterday we talked about the feelings that you don’t want to feel, right? So that’s compatibility too. You’re compatible with not wanting to do certain things, but that might be biting your nose to spite your face, to shut you down. So when I think about compatibility, I’m not thinking about whether someone’s a straight out systems trader or whether someone is a discretionary chart reader.
Those are both two approaches to the markets. Neither one is better than the other. There’s one that’s best for you, but there is something about either of those processes that you might gravitate to if you’re a person. For example, and this is not scientific, but I’m giving you an example. If you’re a person who likes doing like sudokus or crossword puzzles or things that you have to figure out, you might be inclined to look at chart patterns to figure them out in the same way because of the feeling that it gives, you have a sense of accomplishment, for example. So it’s not just economic utility or pleasure. There’s a sense of achievement in that you were tested and that you satisfied the crossword, for example. I think when you look at stock charts, it’s something similar. You are looking for opportunity, you’re being entrepreneurial. You like the feelings of carving it out of stone and creating an asset out of thin air, making money from say, trading.
So I feel the compatibility when you’re looking at it, I think it’s more feelings and emotional and psychological based than it is necessarily intellectual. You have to understand the intellectual aspects of what’s going on, but it’s compatible with you because of your emotional constitution. Does that make sense? So there’s some folks who are like, yeah, I’m really bright. I’m really well-read, but I’m not going to trust anything other than the computer to do all my research for me. I’m going to take myself out of the equation. I don’t want to become emotional. I’m like, become emotional. I think that’s great. Anyway, fe for some folks, that’s not the way they want to approach the market, but whatever. I’m not here to judge the process. The key is to do it and to repeat it and be consistent. That’s when you’re onto something. So keep that in mind that I think the compatibility part is more of a feelings based thing, rather than having a judgment on saying discretionary chart reading is better or worse than, say, building a completely mechanized system through like a simulator and running your business that way. I don’t think one’s better than the other. I’ve seen both work very, very well. I’ve also seen people fail at both. I’ve seen people go out and buy simulators and the data and run the system and see that it has positive expected value, but they can’t find a way to pull off the trades. So again, you know, have to figure out what’s best for you. Just make sure though,
You go back to the other thing that I’ve said, and that is we don’t get paid to know stuff. We get paid to execute. So when you think about compatibility, there might be things that actually feel good, but if they don’t make you money, then you’re going to have to pivot. That might mean embracing feelings that or some of the feelings that heretofore you haven’t want to feel. Does that make sense? Because you have to measure your progress and we get paid to execute. So you don’t have to necessarily do it on one particular day, but you do have to conjugate what’s your process versus what the results are. And I typically don’t focus on the p and l because you want to focus on process. If you’re watching your p and l all day, I think that can kind of distract you and make you nuts.
The key is to stay in the process, follow your process, and the results will follow. Might not happen on the day that you need ’em or want ’em to, but they will happen. I think though, in conclusion, you can kind of see how the compatibility part is more about does it jive with you as a person for who you are? And so chances are there’s not a lot that you need to necessarily learn to make it compatible. You kind of know ahead of time based on how you’re built and what it is that you like to do, whether or not that that would be a process or a system that you could follow, add infinitum. Anyway, please like and subscribe, leave a comment if you can. I’ll respond to everything. That’s how I learn and shoot over any type of topic you’d like me to cover if I haven’t already done it. Happy to look, thanks for being here and I’ll see you tomorrow.

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