Everybody, it’s Michael Martin, thanks for being here. So, happy Monday, I got a good email that said, hey, I see a lot of people in the markets, they have these designations, can that help me trade better? And, you know, I have mixed emotions about it. I think, you know, I always came from a big reader.
I think knowledge for knowledge sake is definitely worthwhile. You can’t lose when you learn, right? Depends how old you are too, and then like, how do you plan on applying it? You’re not gonna learn how to trade by getting a designation. What it can do is help increase your scope, right? Your, not your sphere of influence, but the things that you would possibly see that could be catalysts.
Outside of CMT, which is kind of like, I think the one that would help traders the most, right? The folks that I know who have other designations, whether it’s SEMA or CFP or what have you, Chartered Life Underwriter, this and that, more for insurance, they, and CFA, of course, is the big daddy one on fundamentals, they can all be helpful, because they all help you understand money better, right? And if you don’t come from a money background, if your family didn’t have money, the more different sides of the story that you hear can help you better manage risk. But do you need it? No, you don’t need it. Can it help you? It depends.
Like I said, the guys and gals that I know who have, it’s mostly guys who have designations, came from another area in life and then kind of got into trading that way, right? They were working with a CFA somewhere, perhaps an MBA, and then as fate would have it, they changed jobs, changed careers, did this and that, they got into trading, and they used all of their professional history and experience with their designation to help them run money today. I know a lot of people who have credentials. I know the entities that provide the credentials.
They all do a great job of discussing risk reduction through diversification, and they all have their unique way to approach that diversification, correlation risk, and this and that. But I think for a trader, if you wanna learn to manage risk, you can start doing that right now with one of these funding accounts or these trading challenges kind of a deal where you spend 50 bucks a month. So think of that perhaps as your education.
Put the money to work, and I don’t endorse any of them, and I know that there’s a theory out there that they kind of make money when you fail, and there is truth to that, like that you have to keep paying every month to use their technology, but when I think about the grand scheme of things, I have a sense that this is a good way to get a good simulation in without having to put up a ton of your own cash, right? So you think about paying 50 bucks a month over the course of the year, you’re gonna really get to see how smart you are and how well you are, not smart in that sense that you’re intellectually smart or not, but how smart can you be in managing the risk? If you remember last week’s episode, I think it was on Tuesday, we talked about the four seasons of trading, like you really need to have an answer to almost every question that could possibly happen to the instruments that you’re gonna trade, right? And not having that information is really derelict on yourself, right? Because it’s no one else’s fault, you can’t delegate risk management to somebody else, whatever you do is on you, if you make money, great, if you lose money, great, you’re gonna learn from all of it, and you get to figure how to calibrate, right? And how to throttle, when to trade up, we talked about equity curves and knowing when to scale up your trading and when to back off, I’ve said before, if you can’t make money with cash, don’t use margin, right? Because it’s hard enough to get the money in the first place, I know, I was a broke-ass bitch when I started, I didn’t have the money, the good news, I didn’t have a lot of debt either, and I paid my own way, I’m self-made, so I can look back and say, I did it. But I think if you wanna really learn something that can better help you understand trading, I think CMT is pretty much the only way to go, if you wanna handle client funds, there is a way to differentiate yourself outside of the enormous education, right? That you’re gonna get, that’s the key part, you’re gonna get very, very well educated, that’s the main thing, you might be able to enhance your stature and separate yourself from the crowd by having a designation, right? Because they’re not easy to get, you know, CFP is the gold standard for financial planning, again, it talks about risk reduction in a very thorough way, but I don’t suspect you’ll be doing a lot of trading with a CFP, now, I know a few guys who are CFPs that do get it, you know, they get the difference between diversification, risk reduction versus risk management, which is, how do we move inventory when we’re wrong? Or how do we know to move out when the getting’s good? Because we have to preserve our capital, right? So, you don’t wanna put your head in the sand with any of these types of things, because, you know, time doesn’t necessarily heal all wounds with respect to managing risk, so there is a day and an age when you have to get out and protect your cash, now, some of these people, like when they go on TV, they’ll talk about, well, investors should buy and hold, they should do this, but I think they’re speaking, and this just hit me like last week, I think those folks are speaking to an avatar, you know, a 45-year-old family, man and woman, they have in-laws, two sets of in-laws, right? And they might have some kids, they have their own retirement, so they gotta be careful with what they do, they might have to, like I said, help their parents, either set of parents, if they’re a ball of life, they have to provide for their kid’s education, plus provide for their own retirement, then have to pay a mortgage, right? So you can see the financial trappings of society, so when you say to people, generally speaking, just buy and hold, that’s true, but if that family was 45 years old, right, at the top of NASDAQ, when did they finally get to break even, right? Because if you had a 20%, think of it this way, if you had a 20% stake in an instrument that goes down 80%, you know, you’re down 16% to your portfolio, like that’s a big hit to be down, and one instrument, nevermind. So I don’t think the designations are gonna help you really understand that outside of the CMT, you can also learn to do this on your own by just looking for support and resistance on most charts, right? Look at the dailies and the weeklies, and you can kind of see like, okay, here’s where the market, clearly the market’s rolling over, right? It doesn’t mean that it’s in a bear market, but you can see weakness showing up long before it actually, you know, hits you very, very hard in your portfolio as an investor, you know? So maybe it can help you design a trading strategy.
I don’t know. Maybe it can. I don’t have it myself.
It wasn’t, you know, I knew like Louise Yamada and Alan Shaw, right? Legends in technical analysis. But none of us really knew that they had CMTs or they were kind of like in that space. They were just people who knew technical analysis.
And it wasn’t like the, the firm would never give us an incentive to go get that because they don’t know how it would turn into commissions and fees, right? They’re only concerned about is revenue. They looked at us as consultative salespeople. And our job, and that’s one of the reasons why they have you go out and get a lot of licenses.
You don’t really learn anything about managing money. If you go like the typical wire house route is you go get to seven, then you’ll take the 66, which is a marriage of two licenses, the Blue Sky Test, which is the 63, and then the Series 65. When we were in New York younger, in younger days, we were exempt from needing the 65.
I wasn’t gonna do any of that business anyway because I didn’t wanna allocate money that I was raising from clients in those accounts and then give it to somebody else to run because that’s, I wanted to learn my craft, right? So everything that I was learning for myself was also helping my clients keep their losses small. That’s why when I went out on my own, they all came with me is because they knew I really gave a shit about their money, right? So I would always talk about playing defense, but I was also buying really blue chip stuff. I don’t remember having any crap.
I wasn’t taking flyers at all. They were all blue chip names that were bought with good fundamentals, good technicals, and with an eye towards six to 12 months out being much higher than it was when we bought them. But I think you’ll get a great education.
This is a question where, look, I don’t think it’s gonna teach you how to trade per se, so you’ll have to take the bits and pieces that really resonate with you and turn it into a trading model. I think you can probably get 99% of what you need here and on other YouTube channels with some of the more specific tactics and stuff. We don’t do tactics here.
I do tactics in the mastermind, but that’s because I know the audience, you know what I’m saying? I’m not just gonna blurt out, like, here’s how you have to do day trading and swing trading. It has to fit with the emotional makeup of the person, right? There has to be compatibility. So if you’re curious, there’s other places for that.
Once I get to know who you are as a person, then it’s much more streamlined because I know that there’s an appropriateness for you, like first do no harm, right? I don’t wanna be the one who causes you to go try something and you go and you get your face ripped off. That wouldn’t make me feel good. I think this channel is more dealing with the hardest part of trading, which is the inner game.
Anyway, if you’re new here, please subscribe so I get to know you and the types of things that resonate with you on the channel. Also, please go to TraderMindset.com and you can download a free copy of the audio book version of the inner voice trading. Thanks for being here.
I’ll see you tomorrow.
