I discuss adapting over different time periods in your career and managing your sizing increases.
[00:00:01] As the market cycles and our technology changes, you're going to have another opportunity to dive into something that didn't exist before and
[00:00:09] Step your game up and I think that that's that curiosity to do that and that willingness to do that which is not always easy is
[00:00:17] What keeps you going? It's what makes you adapt to so many different
[00:00:22] Periods of market change. So just I've gone over this a lot before, but just to kind of hit the point home that I'm trying to talk about today
[00:00:30] If you think about when I started 2002, I think it was playing around before that even but like a that's when I started at my
[00:00:39] Propferm Jabon Chicago. It was read the order book and use this thing called Camtasia which was a screen recorder
[00:00:45] Which is kind of new at the time. I know now this stuff's not new at all
[00:00:48] But we'd record our screens and I'd go home and watch every retracement in a bull market every retracement in a bear market
[00:00:53] I'd be post number move
[00:00:56] How did it you know if CPI or employment were important?
[00:00:59] I have the first figure out like okay when are those numbers important like sometimes consumer confidence
[00:01:05] Important after we come out of a recession right sometimes it means nothing
[00:01:08] So them's employment like now is important and CPI is very important recently
[00:01:12] So we all know that but at other times for that's not important at all market does not even care of CPI misses and
[00:01:18] Understanding like when is when is that happening so then it was okay if that happens and the misses
[00:01:22] What is the order book look like in all the markets in the DAX and the euro stocks and the S&P
[00:01:27] 510 year in the euro currency and then study the book watch it for 10 15 different events
[00:01:33] And you get a feel you get like an intuitive knowing of like how to buy when to buy
[00:01:37] So you have to buy S because you study what numbers matter and what the expectations are
[00:01:41] Same with a fed medium same with an ECB meeting right
[00:01:44] So that was like a whole new skill set to develop and a lot of people did that made a lot of money
[00:01:48] I did that made good money on that and then some some point in time happened where
[00:01:52] Doesn't matter as much anymore. It's still matters a little bit now, but mean that
[00:01:57] Everyone's doing the same thing they're getting microwave lines and underground lines and they're getting the numbers early
[00:02:03] And they're moving before takes away about that edge
[00:02:06] So it prices that instantly and then doesn't move right and then it's okay
[00:02:09] So now it's hours later the next day doesn't matter and you're evolving
[00:02:14] So if that was your thing you have to figure out something else and that flushed a ton of people out of the business
[00:02:18] Like I know tons of people who were good at that and I was good at it
[00:02:21] That's very good at it
[00:02:22] But it stopped working and then eventually slowly it got gone
[00:02:27] So it's like okay, well, well now what do?
[00:02:30] And then from there you
[00:02:31] It was looking at different things. It was correlations and relationships and I started spreading S&P versus NASDAQ to feel
[00:02:37] Like if the market was stronger week, I did it versus the euro stocks that worked for a while and then that kind of went away
[00:02:43] And that'll come and go and depending on what market were in if that's useful or not
[00:02:47] I don't do that as much anymore and then it was
[00:02:51] No boy in front think of what else that would crypto came along somewhere in there
[00:02:54] That was like a frontier market where it was not a lot of
[00:02:58] You know information was not
[00:03:00] People were not paying attention to new projects and new things to divergences between lightcoin and Bitcoin and Ethereum and
[00:03:07] Havings and all that stuff like you know forks and stuff and no one knew so I getting that early figured out
[00:03:13] And then there it's good and then all of a sudden people know that so that's not matter is much anymore and then
[00:03:18] Let's I've skipped over like five of them probably but then we go to today
[00:03:21] It was like okay GTT comes out so I'm on that right away early. What does that mean?
[00:03:25] Well, I as someone who has a lot of ideas but can't program now
[00:03:27] I can program so I can test ideas
[00:03:29] I can build little applets and things that are checking stuff and
[00:03:34] Making my my exploration of ideas that wasn't possible before is now endless so it's like okay
[00:03:40] How can I you to get people around me who are good thinkers and test ideas?
[00:03:44] I can collaborate. I can do it myself. I can start building different ways to look at
[00:03:50] I'm looking at different baskets of like if I have a narrative of
[00:03:55] Like say
[00:03:57] Somebody gives me a stock idea or whatever or someone that I respect it has a good ideas
[00:04:01] I now build a basket of all the similar related stocks and I track that basket and I watch it
[00:04:05] It's like a custom ETF basically. I'll watch that and I'll see and then I have a system
[00:04:09] I made for determining price action that I like using just basic basic indicators nothing magical
[00:04:14] And then when that looks like the price action makes sense
[00:04:17] Maybe I tried to trade and my risk management is built in but point being is not that any this is magic or it's what you should do
[00:04:23] It's just that
[00:04:25] These are things that I didn't even think about years ago, but now I'm using them more
[00:04:30] And I'm using one day options more in the future so if I have a good idea
[00:04:34] So they've getting shaken out three times. I can sit in at one time
[00:04:36] Maybe trade the option a few times and catch the big idea without having like massive open-ended risk
[00:04:42] So it's using my skills of understanding the market but
[00:04:46] Understanding that the technology has made it harder to stay in the moves because the whipping this is to be clean
[00:04:51] I could stay in it now. It's not clean
[00:04:53] so
[00:04:54] It's just always thinking that way
[00:04:57] And sometimes the lights go off for a while and it's hard and then all of a sudden it gets easy and it's like I've heard it said that
[00:05:03] This job is really hard but sometimes it's easy and maybe not a lot
[00:05:07] But when it is easy you have to be around for the easy part and that's just
[00:05:11] That's just surviving and
[00:05:14] I think that's kind of the big message that that I've been
[00:05:18] Telling myself lately too is when you do things just keep in mind that like it never is gonna really change to some extent
[00:05:25] If you have that outlook in that curiosity you're always gonna find something else because you're always moving forward
[00:05:30] I remember back in 2000 I was on the message boards looking up like what you know bullshit
[00:05:37] Hiked up text stock chip stock was gonna take off and I was trying to front run
[00:05:40] Kind of you know the crowd with the greater full theory basically. I don't really know what I was doing
[00:05:44] But I did really well with that and then I lost a lot of it
[00:05:47] But it was just another way of adapting to the times with the tools that I had and then now
[00:05:52] It's like I've made money from my stuff. So now I have to manage like do wealth management
[00:05:56] So I'm taking some courses and like how do I diversify and and manage the money
[00:06:00] Which is totally different than trading and that's another job that I now have had to deal with that didn't have before
[00:06:06] Which is a good problem to have but it's definitely more resources and it can be more stressed
[00:06:10] But so that's like the first thing I wanted to say the second thing is
[00:06:15] sizing so totally different topic sizing
[00:06:18] Position sizing a lot of people talk about
[00:06:21] How do I go up like that free winning days in a row when I go up like okay? Well, what if the free winning days was good for your strategy
[00:06:28] And then the next win day is terrible for your strategy
[00:06:30] You try and try and try and do that mean reversion. So then you blow up with your fourth day and get back all your money
[00:06:35] There's a mix sense so the better way to do it
[00:06:38] Just think about it as like I want to scale this and I want to take tons of reps and if you keep taking tons of reps and you manage your risk
[00:06:44] I've actually over time it just you don't have to try it goes up on its own
[00:06:48] It's just honestly not hard for it to go up think about like a sport when you start scoring and breaking down defense and basketball
[00:06:56] You have your moves and you have your offense
[00:06:57] It's not hard for you to score points when that starts happening
[00:07:00] But when that's not happening and you want it to happen you start forcing shots and all of a sudden when you're foreshots
[00:07:06] You visit your confidence and
[00:07:08] Of your teammates too, and then when you do have an open shot
[00:07:10] You don't even want to take it because you lost your confidence. So contrast that with
[00:07:15] Incrementally growing and improving and it's something that you want to scale with the intention of
[00:07:20] Understanding that you can go up a little bit, but it'll just happen when when you're on the right track
[00:07:24] And I went through this so many times. It's tough because I like to push the envelope a trade bigger but sometimes it's just
[00:07:32] The the small ball I call it where you're medium to small size for whatever that is for you and
[00:07:37] To make you tends to make you a lot more money because then you you just get big by accident by virtue of doing the right things
[00:07:43] You end up being bigger at the right times and you end up being smaller when it's dangerous and you end up taking winners on losing trades
[00:07:51] Like it's a the wrong idea, but it goes your way doesn't feel right. You get out
[00:07:55] And you don't have to wait for your stop because you just know it's not right and
[00:07:59] That's what you do when you're winning and I've gone through
[00:08:02] For the end of time this podcast is gonna be going through the same things over and over because it really
[00:08:06] That's the what it does. It's the same stuff
[00:08:08] That's just mastering the same little things for you
[00:08:11] Which is gonna be different for me, but it rhymes in terms of
[00:08:15] You know mastering risk management mastering yourself
[00:08:17] In no one's gonna be just like me. I'm not gonna be just like them and
[00:08:22] I've talked with a younger person who's really interested in trading and
[00:08:26] It's about like what do I do how do I start and it's just like you you go over your interest did
[00:08:31] You read a lot of stuff you reach out to people who vibe with you who you've felt like a connection with what they said
[00:08:36] And then you you go from there and you just follow the bread crumbs
[00:08:40] You just keep sending yes to the ones that feel good and when they don't you you don't do it
[00:08:44] And you you figure out that like you figured it out if you start blowing up
[00:08:48] Maybe you need options more because you can't trust your risk management
[00:08:51] So you give it over to the options and you sacrifice some profit and that's a real simple and blunt and maybe that works for you
[00:08:57] And then
[00:08:58] It evolves later on. It's like okay, well I have a different strategy and
[00:09:02] I'm very analytical and and I like to look at options spreads and play my ideas that way and okay great
[00:09:07] And then somebody else wants to be outright more and it's just you find your way there
[00:09:12] It's kind of like you don't know how much is too much a risk until you go through a big drawdown
[00:09:16] And then you realize oh, this is what I'm wired. I'm not wired for this. I can't trade this way
[00:09:21] Even if it works on paper
[00:09:22] I can't live through it. That's the big thing for me. It's like oh look at my system
[00:09:26] It's great. You only draws down 35% well
[00:09:29] You know in practice is kind of being worse at some point, but then you can't have it
[00:09:33] You can't live through it. You can't go to bed at night. You're sick to your stomach
[00:09:36] It's not the right second of work. So you got a build something that works for you
[00:09:41] And then that you feel good about that you don't feel like you're losing yourself so that's my wrap for today good luck