Trader Mindset

With options you can bet where you think something is going to go and also where it might not. You can backtest and simulate option strategies for outright directional trades as well as multiple option positions. This includes butterflies and condors. Love the VIX? Don't fall in love... You can create a vol trade around any instrument and perhaps better manage your risk. Tony Saliba's new book shows you how you can do with while minimizing your risk. (I published the book). Click here to get Tony Saliba's new book for free. If you are interested in studying this further, you can study with Tony AND get access to his proprietary options trading simulator.

Trading Tribe The is a variance between what you think, what you know, and what you feel. Thoughts are creative, knowledge can relate to intelligence, and what you feel is emotional. Your emotions effect your judgement, your judgment effects your behavior, and your behavior effects where you end up in life. We didn't talk about stocks or commodities in the Incline Village Trading Tribe. We didn't talk about feelings either, except to get into the willingness to feel our feelings. Then someone would "send" and get into showing us what it felt like to feel what they were feeling. We can relate to the feeling, not to the drama that got someone into the feeling. That was the "story." This is why buying another person's trading system or "proven" rules is a mishap waiting to happen as you may understand some/all of the trading rules, but that you can incorporate them into something that you can replicate is highly improbable. Their rules are not backtested despite there working for some people. Our teachers and courses teach proven, backtested rules and include what the emotional tradeoffs are at each point. Denying your feelings around trading and risk leaves you with a blind spot that will reveal itself just when you are most insecure. See how we can help you learn to trade for long-term success. https://martinkronicle.clickfunnels.com/welcome2bu3bjg9

If you subscribe to get NYSE data, you literally get everything that trades there. You're not likely going to need all those names running through your simulator. I removed all the nonsense that I knew I didn't want to be in. I called that process "raking the data." I removed the following from the data feed: -stocks below $20 per share -stocks above $100 per share -shares with less than 1 million ADTV -Preferred Stock You can figure out what is best for you. What is left is what you will run through your simulator. This also helps you stay objective and can stop you from obsessing about one particular name. Also, it's fantastically hard at best to keep track of all the potential names to trade. This process can help you stay open-minded.

Use equity pairs trades to stay in trades longer. If you are trying to increase your holding time but are scared, you can buy one long and sell another short against it. Ideas to Test Look at the strongest equity sectors from a relative strength standpoint. You'd buy the best name long and sell the worst short. You are looking for the long to outperform the short. This is a relative value trade. If the market crashes or corrects, the sting of the down move will be offset by the short position. You have to test these ideas, but this is a creative way to get your testing ideas going.

Human beings are emotional beings. We all have emotional systems. If you are not connected to your emotions, you are likely to see them emerge when you are under the pressure of trading. A system is a set of rules that you can follow. After you get the system generated order, you have to enter the trade into your platform. That's where the fun starts. The Trading Tribe was set up by Ed Seykota to help traders understand the emotions that would derail one's trading. Scenario 1: you get a system generated order, but you do not enter the trade. Scenario 2: you have no orders for the particular day, but you enter an order on the fly. In both scenarios, there is a variance between your trading system and your emotional system. Befriend your emotions and make them allies not antagonists. They are trying to teach you something.

Discretionary chart reading is problematic as you can't backtest it and calculate the expected value of a trade. Only trade set ups (the combination of entries, exits, and position sizes) that have positive mathematical expectation. Get a simulator and backtest your trading ideas to find the expected value. The software I spoke about in an earlier episode will do the calculations for you. Expected Value Formula E = (Ave Win)(% Win)-(Ave Loss)(% Lose) Roulette 2 Kings

The Average True Range (ATR) is a measurement that professional traders use to adjust their position sizes to normalize risk across all instruments. Normalizing risk allows you to look at Gold the same way you look at Sugar or AMZN for that matter - they are all the same percentage risk to your portfolio. Don't make the mistake of trading with "tiers" as no one optimizes their trading for the number of shares. You are trading like an amateur if you are trading a security risking $2 if the daily volatility is $6. Downtiming to intraday time frames is a foolish endeavor and even in doing so, you can't change the fact that the daily vol at $6 is too big for what you're trying to do at $2. Average True Range ATR Gorilla Glue #4 Jack Herer

Don't write covered calls. Don't come up with a strategy on the fly. You need to know the math before you put the trades on. Backtesting does NOT predict the future, but it gives you an idea how the idea(s) would have worked out over the last 20 years. What is past is prologue, but at the same time history rarely repeats itself the same way. I encourage you to backtest b/c you can use the hypothetical results in your marketing and discuss how bad the "bad" would have been in the past. Most investors or backers want to know the worst case scenario. Backtesting can give you an idea of the magnitude and duration of the drawdown, the worst loss, the expected value of a trade, and the best run of winners. Knowing these numbers can help you build confidence in your ability and also give you great insight on your emotional intelligence regarding trading performance - gains and losses. Get Tony Saliba's book for Free. Go to MartinKronicle.com and look in the top right corner for the details. Access to his options trading simulator is here: choose "options." It's for students only.

I don't trust stocks. Commodities are so much more reliable. David Stendahl - Signal Trading Group Moore Research

You have to backtest at the portfolio level - not one security at a time. Simple models are best. If you are testing on Trade Station, you can only test one idea and one security at a time. That might lead you to try 45 indicators or studies onto the name - that's your ego talking and you'll not likely have the same scenario show up the same way they more overlays you have. Again, simple is best. Test one simple idea across hundred of securities. Why would you spend weeks trying to find a model to trade only the ES or TSLA? That's myopic... Tradingblox Mechanics (the follow up to Trading Recipes) I used CSI Data as the data source. Seasonality in commodities is VERY reliable and it applies to both outright directional trades and spreads. MNNAX was the ticker for Munder Net Net Fund. I said MMNAX which was not the ticker.