The Stock Trading Reality Podcast

The true skill set of a trader has nothing to do with reading technical charts or understanding balance sheets and cash flow statements. The true skill revolves around understanding your emotions and knowing how to control them. There are a variety of emotions that need to be considered within the world of trading and investing but one of the key emotions is fear. Fear is tricky because not all fear is bad. What do I mean? I want to quickly walk you through two types of fear which must be understood and harnessed. These may not be the most exciting topics do dive into; but, they’re some of the most important and this is why most fail. The normal person chases after the exciting topics and ignores the boring ones. This is a huge mistake! Let’s talk some fear.

The market has a very sick sense of humor. If you’ve been around long enough, you know exactly what I mean by this! For the unsuspecting victims, they are treated as little puppets until the market decides to crush them. I know I’ve been there! The market has played me like a fiddle on more than one occasion. The difficult part with all of this is to most traders, they have no idea until it’s too late. That’s why this episode is so important! When you can become more self aware, you begin to put yourself in way better positions and are better prepared to recognize the market’s mind games. I interacted with someone recently who demonstrates exactly what i mean. I can understand why the person thinks what they do, but this is the type of trader you don’t’ want to be! Let’s talk about it!

I want to talk about a topic that applies to all of us in one way or another. I recently had a conversation who made the argument that everyone should be paid a livable wage. I know this is not some new thought or a talking point which has not been discussed in the headlines before; however, I did want to bring another view to it that I believe many are missing in their analysis. If you ever come across someone who wants a living wage to be paid (or perhaps you already feel this way), I want to offer up a few other angles to consider. I respect everyone’s point of view and can appreciate where everyone is coming from, but if a topic is going to be addressed in the most efficient way possible, we need to ensure we’re approaching it as accurately as possible. Let’s get to it!

Yes, life is tough. It’s correct, the world is not fair. Some people start off with more of a head start than others. You can’t refute these things, they’re fact. With all that being said, there is a powerful question you can ask and it’ll get you pointed in the right direction. At the end of the day, that’s what it’s all about. Finding the direction you should be headed in and then going with it. What is this question and what makes it so powerful? Let’s discuss it. I don’t want to overcomplicate anything but hopefully get you thinking in a way that’ll drive maximum efficiency.

If you overlook this particular dynamic in trading and investing, you’re going to experience failure. There’s a couple of reasons for this and neither of them in the big picture is going to work out well. With that being said, this is where the irony of the problem arises because it develops from a “big picture” horizon of time. This is also where additional irony comes into play because as traders and investors we need to be patient and allow consistency to add up over larger horizons of time. This all sounds fine and dandy (and it is in theory), but in reality, these things will work against you and cause pain. Let’s make sure you are well aware of this thought process so you are not caught off guard.

I recently released a video with what I thought was a good argument for the logic some people choose to use in their learning journey. I was confronted with two rather lengthy comments (from the same person) objecting to my claims. I wanted to address these as I believe it makes an interesting conversation and, hopefully, can open the eyes of people who ascribe to the line of reasoning displayed on this individuals’ part. I also believe that many of the problems in life can be solved by learning how to converse with one another and not throw logical fallacies into one another’s face. We have a bit of that here so I’d like to try and point them out so we can all learn together on how to conduct the most efficient conversations possible. There are some doubters out there, so let’s address their objections and try to clarify everyone’s perspective.

It’s nothing that has not been said here before, but trading is very difficult. One of the biggest reasons is because of all the gray territory that exists within the world of learning and improving. Much of it has to do with the way the mind works and how we process and store the information. There is a concept in psychology known as dogmatism which, when left unchecked, can truly set you up for failure and headaches. If you’re anything like me, you’ve heard this term before but never really know much of what it means. Upon studying it more though, it creates a threat that we all need to be aware of. Not only when it comes to the world of trading, but to the general way of life. The problem is, there is also a fine line within trading when it comes to this as you don’t want to pull yourself in too many directions. Let’s talk about this more and make sure we are on guard and aware of these potential pitfalls.

I’ve started to get more aggressive in my current trading with SPX options and it’s happened…I’ve been told I’m a dead man walking! I’m told it’s only a matter of time before the market owns me! Here’s the thing though, this person was right and I “got owned” in a single losing trade that erased, literally, nine days worth of gains! Yet, I’m still nicely green on the month! Huh??? This opens up a great discussion on how trading strategies can work and how you can wisely go about developing a strategy to suit your needs. I’m not the greatest trader on the planet; however, I have been trading for almost two decades so I’m done enough dumb things that I now know to avoid. Let me walk you through this accusation of being a dead man walking and how it’s accurate to an extent, but overall, not really.

The goal for us all is the same: gains. The problems for the vast majority of people can be traced back to the time component of these gains. When you are told “slow and steady”, many people scream back, “No! Get rich… now!”. I understand the allure of this. We want to have freedom and do fun things right away. Factor in being ambitious and the picture becomes that much more gray.; My guest, Morris, is a great guy who has done very well for himself in New York City. He’s grown in his career to become the Chief Financial Officer of a company and is striving to leave a legacy for his family. Morris has dipped his toes in a whole variety of strategies from investing to day trading to swing trading. He’s experienced the ups and downs the market offers and has come away with many valid learning lessons… all of which he shares with you! Let’s get to it!

Do emotions affect your trading results at all? Assuming you are a human being and honest with yourself, your answer is “yes!”. For veteran traders in the market, you know this to be true and there are a variety of ways you can tackle this problem. For some people, removing themselves from their trading completely has fantastic results. In this episode, I welcome back long time member Joe (”JoeK” chatroom alias). He has experience in both the world of day trading and, now, swing trading. Due to his job and career ambitions (which is always awesome!), he needed to adjust his trading style. How did he make this transition from day trading into swing trading? How does he find his trades and manage them? We get into that and a whole lot more. If you are someone with a job that keeps you busy but you still want to keep trading alive and well within your wealth building plans, Joe is someone who can offer you some wisdom for sure. Let’s get to it!