30 Questions with Michael Martin about Trading, Truth, and Mastering your Psychology

“Successful trading is about dealing with failure. That’s a psychological and emotional issue that you’re going to have to deal with for your entire career. Not addressing it or speaking around it shows a lack of integrity.”

We just had a Q&A with the entire StockTwits community. We invited Michael Martin to come talk with everyone. He’s an author, trader, and teacher. His online school MartinKronicle features faculty such as Victor Sperandeo, Peter Borish, and Scott Kaminski who teach equity, options, and commodity trading strategies. He’s also the publisher of Tony Saliba’s new options trading book Managing Expectations. Today, Martin is a position trader focusing mostly on commodities and options.

What follows is a recap of our live Q&A session. For the full conversation you can visit the #TradingTactics stream. We named this interview Trading Tactics because that’s what Martin wanted. It also speaks to his speciality — he trades with a purpose and a plan.

When you do an option spread, do you ever double down on a losing position? — @Nintendo63

Instinctively, I’ve never doubled down. If I smell smoke, I assume it’s a 5-alarm fire. I rarely trade option spreads by the way. Commodity spreads=yes. Options directionally.

What is the one thing you would tell yourself if you could go back to when you first started trading?— michaelbozzello

Michael Martin’s answer to “what is the one thing you would tell yourself if you could go back to when you first started trading?

How do you scan for setups? Software? Long and short term parameters? — allCityTrader

I’m normally looking for convergence/divergence between technicals / fundamentals. I spend the day reading.

What’s the best path to a job on a trading floor?— thebigrabooch

The floor is obsolete. I’d focus on learning one instrument and grow from there.

What would you consider the best way for a complete Options novice to ease into using Options? Where do you start!! Thanks — DeathCubeA

Trade what industries you know. Allocate an amount of money you’re comfortable losing in order to learn. Learn about volatility and its impact on option prices.

How is Goldman Sachs allowed to manipulate stocks by changing price targets and why is the SEC pathetic? Some dude at Goldman put a target of $11 on AMD and it’s down 8% today. It instantly sold off. — DTOS

Price targets are useless so I don’t think anyone is paying too much attention to that. My guess is the algos that pick up newsfeeds entered short and perhaps were able to sell long also.

What was your worst trade and how much did you lose? — mlucasm

I was long cattle and locked offer limit down. Was down about 3% but it came off limit and I recovered some of it.

Are straddle trades more profitable than simply buying and selling the stock/ETF? Any option strategies you lean toward? — Metalstringdom

Not a straddle guy.

What’s the best free resource for a beginner to learn all he needs to get started with trading?- wbm

Read Market Wizards by @jackschwager. Self knowledge is most important to eventually discover your edge.

What’s your daily schedule like? — swissbankster

Up very early PT — read all day. Meditate, yoga, then I get all gacked up on whoop chicken.

What are the top things a beginner should and should NOT do when learning to become a smart trader. — zfell

Is your broker (e’trade, fidelity, etc) the other side of you limit/market order? I can see that with a limit order but who is on the other side of a market order? What about market orders- they are instant- who is taking the other side of the trade?
— delawaretradergirl

No. Anyone. There’s no waiting. Participants entering orders, just hitting buy or sell. Global participants.

What kind of bussiness license do I need to trade stocks? Are you typically a buyer or seller of options? — larrycole

Depends on state. If not a business, then none I believe.

Are you typically a buyer or seller of options? — brynnek

Buyer!!!

What indicators do you use? — StocksAndStones

None, they are emotional band-aids.

What screening application/program do you use? With the market sort-of bubbly right now, what would you invest in when/if it does crash?— to0m

Don’t use any. If equities, the strongest names with high relative strength

How do manage drawdowns with your portfolio? I like to curl up in a little ball and sob silently. You? — lcc007

I start so small that I don’t have the type of DDs that I used to. Nothing to manage. I only commit more margin when my unrealized gains increase.

As a trader what do you see traders perform best at and if there’s a reason why? Shorts vs. longs go! — macrochartfreak

Dynamics for short sales v. longs are very different, and two different skill sets.

I am stuck in a spiraling doom thats called $GPRO, how do I get out? — n00bull

If you’re currently long, just sell it and chalk it up to experience. Know your exits beforehand. Sorry.

Do you segregate your portfolio in risk tiers, and what % of it is in the highest risk, and what is typically in that tier? By risk category I mean — hold SPY forever, vs. trade SPY ATM weekly calls. — 1024x

No risk tiers. I trail structure and reinvest my gains into my stops. I have investments and trades. I trade for unlimited upside.

What’s your greatest fear in the stock market? How much do you typically make a day?— swissbankster

“I am at one with the market” nothing to fear… Not sure of your context. Don’t have daily goals. I focus on process and that leads to varying position sizes depending on instrument. Also a function of the # of positions I have in the account. I’m more concerned with putting limits on the % I can lose. If I give back 5% of the previous days M/M balance, I’ll have missed something. You have to know what you’re trading for, I.E, what RoR. I’m not doing this for 12% p.a.

Michael Martin ‘s response when asked “What’s your greatest fear in the stock market?”

How much $ did you make in 2016? — swissbankster

Just a tick under 37%.

If you’re long a stock and want to hedge w/ options what strategy should a beginner start studying first? Do you trade options at all? And if so what’s your favorite strategy?— scheplick

The best hedge is to offset the position IMHO. If I want to trade synthetically, I’ll start out that way. Married puts though. I seem to have done well with buying long-dated calls.

What trading platform do you use to trade and why do you like it? — ybl

I use a phone broker for 20+ years. I’m used to it — better for my makeup.

Does yoga make you a better trader? Or does trading drive you to be better at yoga? ;) — chicagosean

Yoga makes me a better person, and in turn trader. Good question.

What are your thoughts on blockchain technology? do you think it will become a reality? and how would you invest in it?— mr_market_data

Key is security and anti-theft. Reality is here. Not sure yet.

Your favorite books on trading and trading psychology?— DeathCubeA

I think Market Wizards will always have had the most impact on me at this point. Extraordinary Popular Delusions & the Madness of Crowds.

Do you think HFT is coming to an end due to algos and software that trade in nanoseconds? — EdgarsTradingAcademy

Already cannibalizing one another. Trading in nanoseconds isn’t my concern for out sized gains.

Are you bullish on the energy sector? — CashingOut

Bullish on Energy futures.

Do you have a website? Also where can I find your podcasts? — audivolkswagenguy

Thanks for asking: www.martinkronicle.com 
Podcast: https://itunes.apple.com/us/podcast/the-michael-martin-show/id1043460720?mt=2


We hope you enjoyed this Q&A! Press the green heart 💚 below if you really liked it and feel free to highlight or comment on any part. We also have a newsletter for anyone interested in getting daily updates about the stock market.

This Q&A was compiled by Michael Bozzello, StockTwits Community Manager. Make sure you’re following him @michaelbozzello.