Do you have these 5 traits of top traders?

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• 0:00Speaker 00

  Hey everybody, Michael Martin. Happy Friday. So today I'm gonna do a short little discussion, maybe five minutes. And I wanted to share with you something like, what, how did I make it? And there's, there's things that I, that I speak about that are experiential, that I can speak about, as Immanuel Kant would say, a posteriori, after the fact. Almost everything I speak about is a thing that I had to live through, even though if it was a generation ago, or 10 years ago, or two years ago, I try to speak from experience and, and try to give you the heads up, so that you could advance your learning curve as, as fast as possible. But there's something outside of like, the access to the folks on the floor, and the

• 0:42Speaker 00

  big clearing desk that I worked through at the CTA desk in Chicago for EDNF Man, and all the Market Wizard kind of guys that helped me along after I had already gone pro, and all my understanding of designing systems, and programming, and fundamental analysis, and technical analysis. And I thought I would share a few of those with you, you know, today, like, what else did you bring to the table? One was like, a distinctive style, right? I think at the end of the day, you trade your personality type. And, you know, if you have a big ego, you might wanna be trading an accuracy model. I don't know. If you're a little bit more laid back, like I am, you can take the punches a little bit

• 1:27Speaker 00

  more. But ultimately, how you trade, your position sizing, I think it's a reflection of your personality. And so, that doesn't mean it can't change, but it's like, they say in management, if something's not going right, you gotta change the man, or you gotta change the man. And changing the man is tougher to do, it takes a long time, because people are, we're all shaped by our environments, and the people that we're surrounded by, especially when we're growing up, which usually means your family, your nuclear family, this and that. So that's a little bit harder to do, and has to be much more intentional. It doesn't typically happen, right? You could join the military and be forced into an environment where you gotta do as you're told, as an adult. That might be hard to swallow for the first couple of months, but if you don't do it, they throw you out.

• 2:11Speaker 00

  They, you know, they give you a dishonorable discharge. So it's kinda like, do as you're told, and shut up. And in no particular order, I also had a curiosity, like, I was, I always did crossword puzzles, I always tried to figure things out. I would play chess against myself, and just say, okay, if the person moved over here, because they didn't have electronic chess, you couldn't play against the simulator, so you kinda had to do that. I had a curiosity to try to figure things out. I kept track of hits, I kept track of temperature and humidity levels in New York, all on, you know, what was then called Lotus 123, and spreadsheets. Just because I needed the data, and again, there were no places to gather the data, so you had to go get it yourself.

• 2:56Speaker 00

  And I would say, like, okay, over the course of the summer, the average temperature was this, and I would find, okay, what was the range, what was the median, what was the mean? What were the days of, and as a percentage of the days over the summer, for say, June, July, August, for the days that were over 90 degrees, how many of them, what percentage of those days had over 90% humidity? So I was looking at conditional probabilities, without even kinda knowing it, and that's just how my brain worked. I had that kinda curiosity. I think you need that for the markets too, so that you can figure out your own understanding of different charts, and the sometimes fractal nature. I don't think markets are always fractal, I'm sure people who are smarter than me will debate that.

• 3:38Speaker 00

  But just because you can see a cup and handle on the daily, it doesn't necessarily mean that you're gonna see one in a smaller timeframe. And if you see one in a smaller timeframe, you might uptime at today's, and you're like, there's no cup and handle here, right? So, they might be fractal, but not at the same time. Dig it? So, I was always very, very curious. Two, I was determined. I had determination and persistence out the wazoo. Why? I came out of a working class background, and I was waiting tables, caddying, and, I'll give you a quick little story, when I was 12, 13, 14, I had a lawnmower, and I'd push it down the street, and I'd cut lawns. In those days, you know, minimum wage was about $2 an hour, and that's sometimes what

• 4:22Speaker 00

  I would get paid, $2, $3, $4, $5 maybe, for cutting a lawn, depending on the size. It was my gas, it was my mower, I was doing the work. I'd knock on the door and say, I wouldn't say it's $30, I'd say, hey, do you need your lawn cut? They'd say, yeah, go ahead, do it. And then whatever they paid me is what I got. Wasn't the greatest salesman, but I was, I was cold knock, I was cold walking, right? Real estate people do it today, and I would do that all, all the time. Because I needed the money. And in the, in the winter, I'd go do the same thing, I'd knock on the door and say, hey, we just had four inches of snow, you want me to shovel your driveway? They'd say, yeah, sure, go ahead. Sometimes they'd throw me a five-spot, sometimes they'd throw me a 10, mostly it was them giving me what they thought the job was worth.

• 5:04Speaker 00

  And, you know, I was happy to have the money, because when you don't have the money, you do almost anything to get the money. So, so when I got to Wall Street, it was kind of like, it wasn't the first white collar job, because I had, I had a job, when I was at school at Columbia, that I had to wear suit and tie. But, at facilities management, but I, but when I got to Wall Street, I was like, okay, this is a legit job, I could get fired if I don't fulfill my, my entity, and this is where I could change, you know, going from working class, to being in the top 1% as a wage earner. And I didn't know how to behave, all I knew how to do was work hard. I had grit. But that, that was enormously important, having grit, having persistence and determination,

• 5:47Speaker 00

  with that same curiosity, I always thought like, how hard could this be? I'm gonna figure it out. I don't know when, but that's my goal, is I'm gonna figure this out, I'm gonna learn how to trade, I'm gonna figure out things and learn things that I didn't even know were important, like base theorem, conditional probabilities, expected values. The math, I had already understood, just as, as a hobbyist, from when I was a young kid, keeping, you know, Thurman Munson's batting average, or, you know, how many, how many weeks, on average, the Beatles songs, or, you know, when John and Paul, when the Beatles broke up, Paul had the wings and John did his own thing, you know, how many weeks would those things show up in the charts?

• 6:31Speaker 00

  I was, so then I also had a high level of motivation, right? Because you can have persistence and determination, but that could be over, like, a longitudinal manner. You know, you wanna get a PhD, okay, it's gonna take you six years. But I, I was highly motivated, because I came in knowing that I was largely a gig worker who was exchanging his time for money. I wanted to build a business that was gonna pay me royalties and/or ongoing income from having sold something once, right? So I didn't have to build a business that I could generate income that would sustain me, okay? And I wouldn't have to necessarily babysit that thing every day, think of it like a royalty. You know, my parents thought I was crazy, because they were depression era kids, and

• 7:15Speaker 00

  they were like, you go to work, you get paid. So when I went to work, I was like, well, how could I do this, where I could set up fees, and get paid on that, you know, having sold the thing once, and then kinda more monitor the business? So motivation was kind of like a key, a key aspect as well. I had all the motivation to wanna really keep pushing myself, so that month over month, I was making more money, and then year over year, that was pushing higher as well. I wanted my, my equity curve to keep moving forward and moving higher. You can build this into your own planning. I kinda did it instinctively, and then over time, it was, it was much more difficult in those days, but, you know, you could still get it done, because of the fact that there

• 7:57Speaker 00

  was no mobile technology, there was no networking, and this and that, so you'd have to go meet people. But I eventually built a network of, you know, people who could help me, right? I studied with Robert Mundell, I'd go to Columbia and take him for a cup of coffee. He wasn't always available, obviously he's highly in demand, but I would go up there once a quarter, and tell him thank you for everything. Another guy named Philip Kagan, who since passed away as well, he was a hyperinflation guru, and being that I was in the commodity space, he was tickled pink that I would remember him, and come back, and then try to pick his brain about why I'm a Republican, this and that, and, and talk about the 70s. And so, they weren't peers, right?

• 8:40Speaker 00

  They were like, way out of my league, but if I say to you, hey, I wanna come buy you a cup of coffee, or I wanna come take you to lunch, I'm not selling you anything, they would, they would do that. And then over time, I built that network out of people, mostly by punching up, right? Your peers are okay, you're all in the same boat, but to set up a group, you just find that people are bitching and belly aching about the same thing. Who needs that? You know, that's a different type of therapy, that's 12-step. You need that type of brotherhood, sisterhood, when you're going through it. But when I was looking for advice, I was going to people who were a generation or more older than me, because I needed to tap into their experience, what life experiences that they have. You see what I'm saying? So, try to think about any of those things, and how they apply to yourself, because when

• 9:25Speaker 00

  you answer those questions, you help kinda fill in all the moving parts of your evolution. You know, I wanted to do like Cortez and burn the ships behind me, because I knew if I failed, I was going back to waiting tables and caddying golf bags, and I didn't wanna be, you know, an Ivy Leaguer, who was gonna still go back into blue collar despair, because the whole point was to try to escape that. Because by the time I got the job on Wall Street, I had been working since I'm 12, that was half my life, you know, I'm exhausted from physically working. You know, I had sometimes, one, two, even three jobs at the same time, while I was going to school. So I didn't have that magic situation, where I had a trust or a grant, and I had some,

• 10:07Speaker 00

  some grant, some scholarship, but I, that, it wasn't enough, it wasn't a full ride. So, think about these things, and kinda fill in the blanks with your own type of a situation, and, you know, I think it'll help you accelerate your own personal growth. You know, you'll get out of it what you put into it. It's typically not gonna come and kick in the ass, you gotta go get it. It was very uncomfortably, uncomfortable for me to call those people, because, to be frank, you know, they didn't remember me. I was like, oh yeah, I took your class in international trade, and then international monetary policy and theory. Okay, great, what do you remember? Well, you talked about the ECU, as you called it, the ECU, the European Currency Unit. Of course, he was talking about the Euro.

• 10:52Speaker 00

  Then, whatever, 10 years, or 99, I think he won a Nobel Prize, I was long gone, but, you know, I went, I went up, I said, okay, well, let me just come by your office then. You know, because I don't have anybody else. So, it was like, if I don't call them, it's gonna be the same tomorrow. If I called 15 of these bigwigs that I knew, at least I could go see them and pick their brain, and say, hey, I read this article, how do you think this is gonna translate into the market for the next, say, three to six months? Because I needed to change my way of thinking, because I didn't have any thinking on it. There was no one to coach me on, necessarily on Wall Street. Most of my friends were floor traders and owned seats.

• 11:35Speaker 00

  It was a very different business, when they're kinda focusing on one thing, and, when you own a seat, you are the bid ask. I'm an upstairs guy across all these different markets. Anyway, those are things that I don't talk about enough, outside of whatever the licensing and reading the books, and then trying, you know, the different styles. There's personality traits and things that you need to fill in along the way as well. Those are just a few that I thought about, and it probably is true for any particular industry. But, you know, try it out, take a look at these things, and then make it your own. Have a great weekend, folks. I'll see you Monday.