Watch this video on YouTube

So the past two days we’re talking about how to make more money. I think it comes down to how much uncertainty you can learn to live with. We all understand that trading is probabilistic, right? It’d be great if we could just have nothing but certainty. But when you have less than a hundred percent certainty, as soon as you have 1% uncertainty, you’re dealing with some type of probabilistic outcome. So depending on the criteria that you use for entries and exits and this and that and your position sizing, we can say, I think it’s fair to say for most everybody that trading deals with probabilistic outcomes. And to me, if I had to summarize it in a sentence for all the guys that I know from the generations above me, like market wizard type guys, folks my age, and to the generation below me, younger than me, of course not below me, they’re just younger than me.
That’s what I meant. The amount of money that you can make really comes down to the amount of uncertainty that you’re willing to deal with from an emotional standpoint. And if you look at that and create a strata of the people that you know who made the biggest money, also taking into account the amount of time that they put in. To me, I can create the strata based on, because I know them personally, what they were willing to endure. The emotional risk. You have financial risk, and you have emotional risk. And I think the quickest way for some of you who are struggling to kind of increase your p and l increase how much you make every day, week, month, year, is if you worked on the psychology aspect of what risk you were willing to endure, how do you feel about the risks? Some of what I get via email, it seems like it’s not terribly rational or you kind of like the risk, but you only like it when you think you can see it, right? Which is kind of a false sense of understanding of the risk.
Two, it also happens to be prevalent, very, very prevalent, especially in the folks out there who are trading one instrument. And that could be the E mini, it could be the MNQ, or even if you’re just focusing on those lower margin indices, to me, that’s all one product. And you’re like, you’re in and out, or you’re trying to find several trades a day. I would say, well, what would happen if you just bought the SPY or the QQQ and you held it for a couple of weeks? How bad could it possibly be? You want to know how you can teach yourself how to do that. Go back to the live stream that I recorded and just steal that whole model. That’s why I did it. And just see if you had X amount of shares, how bad could it be if you had

A retracement while you were in the position? Look, especially to see what happened overnight. Look to see what happened over any one particular weekend. How bad could it possibly be? And then change the position size. Say, okay, well I couldn’t do this with a thousand shares, but if I did this with say, 10, 15, 20 shares and I actually would’ve made more money than I did trading it. So just remember that to me, I see too many people buying classes joining Discords, doing all kinds of bullshit, wasting their money, and they’re not tackling the thing that could really set them free in many ways. And that is understand your emotional constitution in and around managing risk, and what do you feel when things are uncertain? Also, understand what you think. What kind of control do you think you’re in? If you’ve got more than one monitor and you’re looking at one minute bars, what do you really think you’re in control over?
Hint, nothing. You’re not in control of anything you think you can better see stuff. This is an illusion, but this is what I want you to do for homework. Any of these episodes that I record are basically free coaching. It’s very autobiographical for sure. Almost all of it, if not all of it. And you get to really go to school on yourself. That’s what I think makes this so valuable is that it’s not like they say, teach someone to fish or give them fish. Look, if you’re really starving, I got fish to give you, and there’s no problem with that. But at the end of the day, trading is an endeavor that you really kind of have to do by yourself. You have to eat your own cooking. And so really understand when we think about probabilistic outcomes and the uncertainty, you can study the math all you want, but it really, your emotions affect your behavior and your behavior predicts where you end up in life.
So if you don’t get in control of where Adam meets Eve and the whole process, which is in your emotions and your psychology, you’re destined to repeat the same stuff over and over and over again, even if you’re not even aware of it, right? Because then it’s not unlikely that your subconscious is really running the show. Anyway, we’re done now for the week. Tomorrow’s the holiday here in the United States. It’s the Independence Day so I’ll be off Thursday and Friday. I’ll be back Monday and check out the interview that I did with the folks at All Star Charts.

The post Master this part of trader psychology or stay small first appeared on MartinKronicle.

The post Master this part of trader psychology or stay small appeared first on MartinKronicle.