This is the transcribed version of the podcast linked above ^^^
This is a MAILBAG Podcast which will be listener questions that are sent to us via email and are answered by Matt here on the Podcast. They are also available to our Five Minute Video subscribers immediately after we make them in video form. In this episode of Mailbag Matt talks about the mindset to get out of a slump and the business of being a trader.
MATT: [00:00:01] Matt here from the One Minute Trader something we’re going to be releasing sporadically is our listener mailbag. What I mean by that is we get a lot of e-mails. And you by the way you can send those also to me directly. [email protected] . a lot of these e-mails ask the same questions that we hear from clients over and over again so we’ve put together a series that we’re going to call Mailbag and we’re going to answer questions during these sessions. And we hope you like them. Thanks for listening to the One Minute Trader podcast. And as always keep your questions coming. I’m Matt Davio and this is the One Minute Trader podcast.
BRINT: [00:01:11] Matt, I am in a big rut right now. I’m looking back at my portfolio and I’m seeing a lot of losses over the past couple of weeks, maybe even a month. What would you say is the best way to kind of get out of that. I mean obviously I need to win more. Maybe even like a mental state I need to be in. What would you say? About getting out of a rut?
MATT: [00:01:32] So I heard a couple things I heard portfolio. I heard rut. I’ve been in this for a while. So define define portfolio. I mean why are you a mutual fund manager. Or are you a hedge fund manager. I mean if you’re not then you should not be calling it a portfolio. Which is again a lot of people do. They’ll say I’m a, you know, I’ve got a portfolio. Well. You know what. You really shouldn’t have a portfolio unless you have millions of dollars. And even then you should have almost a business like approach to what do I want to be in. How am I going to approach this as a business, therefore diversify myself. But not to the point where over-diversify. So you can’t even get there to a portfolio level until you have made. Until you have one way to make money. So what I would say to the person that says I’m in a rut, I would say define your rut. How long have you been trading this way or are you. We call it when you have slippage or you have multiple ways that you’re trading versus one way or a way. In other words you are kind of style drifting. You’re not doing what you set out to do. And maybe you didn’t even set out to do it and I think this is really one of the biggest problems. People don’t look at trading and or investing as a business. If you don’t you will lose money. And you will lose it fast. You won’t understand it. You will be frustrated. All those things that I’m hearing. From people regularly. So the way that you. Get. Beyond that is process, you have to define how you’re going to behave in the markets, when you can behave. How much money you can risk every trade. And if you do that things should start falling together.
BRINT: [00:03:30] What do you what do you think the best way to kind of. See it is business in my own mind I mean I’m basically spending time at home on my computer.
MATT: [00:03:42] OK. Have you ever run another business.
BRINT: [00:03:45] I mean I’ve worked many jobs that I’ve never had a personal business.
MATT: [00:03:49] You have never had a lemonade stand? Well I mean in a lemonade stand you have to have a table, you have to have cups, and you can have different variations of that. Those are all costs. Now when we were kids mom gave us the lemonade so that wasn’t even a cost but in the real world that’s a cost. You have to have your goods and your cost of goods. Your time is added to your cost of goods. It’s no different in the tading business. Before you can make money, is what am I leaving that could make money? By spending time here. So what’s my marginal utility. How long should I spend at this craft. Until it becomes a business. If you don’t start with that in mind as far as how do I make this a business, what are my costs? Well I have I brokerage fees, I have commissions, that’s obvious. That’s pretty generic, that’s pretty fixed though we can know based on how much we trade. I have my P&L. So that adds to my bottom line of am I making money or not. I have the cost of having a computer a proper computer but not too much but not too little just the right amount. We’ll talk about that in another video. I have data fees that I have to pay for, which are cheaper and cheaper every year for the retail trader and investor. I either have to have an office or I have to do it where I’m doing it. There may be a cost to that. Is there a cost to my family? Am I taking time away from them to try this. And if so, is my family involved in this as a business. Am I sitting down with them and saying hey this is a business. If I’m successful I’m going to have liberty, I’m going to have freedom I’m going to be able to come coach you in every game, Billy. I’m going to be able to see Susie’s dance performances. Oh those are great byproducts of that business. But if I don’t sit down with everybody, everybody is going to be frustrated. During those times when I’m frustrated and I’m not making money because I don’t have a process. And if I haven’t looked at it as a business. And really put a kind of a cut off not only in dollars risk but time risk. You have to you have to know kind of what your end point is. And you may not know that day one or month one or month three or maybe even after a year. But at some point you have to say, “you know what, This is not working out not succeeding. Either I have to step it up and spend more time” Which has its downsides. Or find a mentor that can spend an hour with me or I can spend a day with me they can really shorten my process. It’s no different, consults are out there in every business they can help you avoid pitfalls and things that are out there in the business. But there are true costs, and if you don’t look at it that way, if you don’t look at what our cost of goods and what is the upside of my time. You can look at it by an hourly wage, you can do it by how much money you have to risk. But you have to be realistic in how you set the process up. And it’s really important most people just come in and go: “I’m going to make money!” You know. And unfortunately what happens so often is people getting involved in markets or investing during bull markets. Right. Everybody smarter than me during the bull markets. I say this all the time during the bull market. You can be the dumbest monkey, fish, carpe, ever and make money. If everything is moving up at the same time and you just throw a dart and buy. It is that easy. Not most of the time, but at times and that’s usually when people get sucked in and start thinking I am so good at what I’m doing. Yet they have no process they’re literally throwing the dart and lying to themselves and lying that they have an actual business. You could go out and try and sell flooring products and if you’ve never done it and you don’t know what it cost to find those distributors and the marketing dollars to open your store and hire salespeople. I mean how are you going to start a business. This is no different. You don’t have sales people but you have to turn a profit. How do you turn a profit? You don’t just throw a dart at a stock or a future and expect to make money. It doesn’t work that way long term. So if you don’t have a process that can make money in an up market, in a down market, in a flat market. Then you’re screwed. That’s really what I want to drive home today, is that, this is a business. Look at it as a business focus your time and effort. Do a P&L, how much time do I have? When do I have the time? What are my risks? Besides losing money. Is my wife going to be pissed because I’m looking at charts all night. Or my kids going to be pissed because I’m not at their baseball game because I’ve got to look at charts, I got to do my homework. Well you either have to work that out or it’s going to fail. You have to. And you also have to get buy in by your significant others, your family. Otherwise you will also fail. I’ve said this for years. If your partners and your family aren’t with you, your business will fail. Whether it’s corporate business whether it’s an ice cream shop whether it’s trading. They have to be on board. It is a family business, in any business that you run. As always here at the five minute trader we welcome all of your questions send us an e-mail anything that you’re thinking about that we haven’t touched upon may be coming in a video. Believe me we’ve heard many many questions. But please keep them coming. I don’t care how silly, stupid, dumb you think it is. Send it to me. I’d love to answer your question. And as always if you’d like to spend an hour with us click on the button on the Web site if you want to spend a day. We have that offering also. I’m not going to hard sell you. You’ll know when you’re ready to make that move. In the meantime, Keep busting it out there keep grinding. Trading is fun. Have fun with it. Make it simple. Make it your own. And have a great day. Peace.
[00:09:47] The One Minute Trader was developed to bring you fresh trade ideas every day of every trading week. Make sure you go sign up for our invaluable One Minute Trader daily emails along with our five minute video emails to get timely insights into evolving trade possibilities. Let One Minute Trader be your second set of eyes for trade opportunities that may have passed you by. We appreciate you listening today to the podcast and we hope you’ll support the show by leaving us a positive rating on whichever platform you’re tuning in from. I’m Matt Davio and this is the One Minute Trader podcast.