Line Your Own Pockets

Michael: 00:00

Hello, everyone. Welcome to another episode of Line Your Own Pockets. Last episode, we went through the common mistakes that beginning traders make and we promised. So here we are to talk about the common mistakes that more advanced traders make. Now, did this last episode where we talked about, you know, the beginning, you know, and we're not just separating them by like profitable, unprofitable, like what's a beginning, what's an advance.

Michael: 00:22

It's more about just where you are in that in that particular journey. So now we're talking about people who've been, I guess, doing it for some time and and, you know, there's some comfortable action with it. These aren't the things that, you know, you would tell someone who's like, oh, I'm just interested in getting into trading. What are what are some things that I should worry about? This is okay.

Michael: 00:41

You've been doing it for some times, but you're probably doing stuff wrong. I'd say, you're probably always doing some stuff wrong, but that's the kind of joy of this. So let's get into it. Let's advance common mistake advanced traders make.

Dave: 00:55

Yeah. And before we get started here, I my actually, my brother-in-law is in town this week for a pickleball tournament. He's a very good pickleball player. He's he's playing at nationals, happens to be near us. He's an older guy, so he's like 70 years old.

Dave: 01:12

He's his age group nationals. And we've been talking about this this week while he's here. And his basic approach is don't make mistakes. Like, that's one of his strategies, and he can beat better players by just forcing them to make a mistake. So not trying to hit the real, you know, the flamboyant, awesome forehand winner, just keep it in play.

Dave: 01:44

Right? And that's kinda how I think about this is, if you can avoid these mistakes, you're gonna be way ahead of almost all traders.

Michael: 01:53

Well, I would say that's that's true for most just high level events, like sports and and chess, and I remember, you know, video games when I used to do that a little bit competitively. It was there wasn't a huge difference between the guy in first place and the guy in tenth place. There wasn't like an insane, like, this guy is 10 times better. That's why he's always you know, every now and then you get like a prodigy or something. But most of the time, there's a very small difference between the best and, you know, the guy who never made the podium.

Michael: 02:25

It was just that. It was who made a mistake along the way. So you're playing against each other, and it's just the one guy, you know, I used to compete in martial arts tournaments as well. And maybe it was the one guy who dropped his hand for a brief enough section, and you're done. Right?

Michael: 02:41

So, yeah, I would say for trading and for most things, that ends up being the the biggest determining factor when it when when you get to a certain level. There's a lot of ways to go along the way, but as soon as you get there, that's the mistakes that you can minimize, I think, makes more difference than, you know, is your strategy right 52% of the time, and that guy's only right 51% of the time. That doesn't Yeah.

Dave: 03:04

And he he in fact, he won the tournament yesterday, and my wife was there watching him. And the one team that they beat actually, they played him a couple times. They they lost him the first time, but by the time they got to the tournament, they were playing for the championship, and they ended up beating the same team. And that the team that they beat, they were so frustrated. Like, man, we there's no way we should be losing to this guy.

Michael: 03:30

Mhmm.

Dave: 03:31

But he just kept putting it in place and forced them to make a mistake and adapted in the middle of the game to make sure, you know, to to strategize and and beat this team. So it's pretty cool. But, yeah, a lot of analogies there, and and you're totally right. It's there's some takeaways there that you can apply to all different sorts of things, not even including training. I mean, lots of different things in life.

Michael: 03:57

Yeah. It's yeah. Again, you know, when I think one thing that you learn when you are testing a lot of strategies is that there's a convergence towards an optimal that it doesn't make sense to push on too much. Like, you've gotten to the point where your strategy is is great, and you keep looking, and you keep working, and you keep pushing. But there's that diminishing kind of marginal benefit of, okay, I've made this strategy right, you know, 2% more time.

Michael: 04:29

And, you know, I've got a little bit out of my winners and my losers, and and you keep trying to push on these edge cases. But, you know, like we're gonna talk about is that, you know, a couple mistakes, a couple bigger problems one way or another, just wipe out all of these kind of marginal edge cases. So it is a really interesting place to to focus to make sure you're getting kind of the most bang for for that focus buck.

Dave: 04:52

Yeah. So the last mistake we mentioned in the last call was, like, traders basically backtest wrong. Like almost everybody to backtest backtest wrong. And the follow-up to that is somebody that's has a strategy. They're they're back testing it correctly.

Dave: 05:13

The big mistake that a lot of traders don't make is they don't automate their trades. They keep quick trading. They feel like they need to be in the loop. You know, it's like a it's almost a source of pride that you're actually there making the trades. But the way I think about it is you're not gonna be the best in the world at clicking trades, you know, click trading and entering entering numbers into fields and clicking buttons.

Dave: 05:45

Like, you're never gonna be the best in the world at that, but you don't have to be. Like, there's trade there's software that automates that. And I've seen it time and time again, traders that make that leap, they're that is a huge turning point in their careers. I've seen it time and time again. It was the same with me.

Dave: 06:05

It just gets way more scientific. You get it gets way more predictable. Your reconciles make more sense, the you can just it's like you're trading like a surgeon there rather than like a gunslinger.

Michael: 06:23

Well, you know, I would argue too that when you get to that when you get to that point is the first time that it's there's no discretionary kind of activity taking place. Because if if you are a human clicking a button, and even if you are following a system that you've written down perfectly, you still had to choose to click the button. Right? You're you're still putting that non robotic thing in. And if you if you truly have a system, and the system says buy here, sell here, do that kind of stuff, if you truly have that system, then that's why not have a robot kinda take care of that from that point on.

Michael: 07:04

Right?

Dave: 07:05

Yeah. And so I'm working with a trader now who is a discretionary trader, and he's creating strategies from the ground up to be automated, and they're gonna be separate from his discretionary trades. I got got a message from him the other day. He's got these strategies live, and they're going alongside his discretionary trades. He's like, Dave, I'm up like 40 r this month.

Dave: 07:35

I've done nothing here. All the trades it's making are better that he knows it's better than I could like like getting better fills than I could have gotten if I'd have done it manually. And it's just totally additive to what he's doing. And it's it's eye opening because he it's it's really fun to see somebody go through the exact same thing I did where, you know, you realize you have the ceiling by click trading, and then, you know, realizing that if you remove yourself from the loop, not overnight, but but ease into that, all of a sudden that ceiling is gone, that opens up a whole new set of strategies to think about, different ideas you could trade, that you just can't even consider thinking about when you're click trading.

Michael: 08:23

Funny you tell that story because you said that that actually reminded you of yourself, and as you were telling it, it actually perfectly reminded me as myself. But I was I think like a lot of traders out there too, where I was blaming emotion for a lot of problems with my trading and just saying, you know, the amount of time I spent, you know, like, writing in journals and reading books about, like, emotional regulation and all this kind of stuff to try to get around the problems that I had trading. But at the end of the day, it was it was pretty much just that. It's wasn't automating my entries at all. And I think a pursuit of automating your entries, if for no other reason, but we just mentioned a lot of other reasons, really points out how discretionary a lot of your setups are.

Michael: 09:15

You know, you'll talk to someone and they say, oh, you know, I have a yeah. Have a setup and I look I look for that setup, and I take trades, and, you know, I've got my entry all planned out, and my exit all planned out, and all of them. And this is what we talked about in the first one, right? I have all that planning done. And you go, good, automate it.

Michael: 09:29

And then sometimes, that's where they go, what? And you realize that if you can't automate it, then there has to be a bunch of things along the way that require human decision, and then it's not systematic at that point. There is that that kind of discretion in it. So those were two things I noticed when I when I got into automated my trading is one, the whole, you know, the emotions things kill me that I don't say went away because there's always emotions that change. But also, I realized how many how much I was kind of pushing myself into the trade as well, and how many things that I had to figure out a way to automate away.

Michael: 10:12

So it was kind of the start of putting me down that path of, oh, now I can fully automate it because I know that, you know, I'm making decision here, here, here, and here. I can't just have a robot do it for me. So those are the areas I need to figure out how to remove myself in order to make the the full automation possible.

Dave: 10:31

Yeah. And so when it happened to me, I got into back testing sort of a little late, know, relative to my strengths. Like, was like, this seems like a good idea, but it I drug my feet a little bit. And as I was trading this strategy, I did have a little bit of discretion in there, in that I was looking at trades that were gapping, and I was making a decision about, okay, should this be on the list today or not? And in my mind, I was like, there is no way you could capture that discretion, my awesome discretion in my head about, you know, making that decision.

Dave: 11:17

No way you could distill that to code. And I was like, well, let me see. Yeah. Let me do a back test and just see if I can get something in the ballpark, maybe. It's not gonna be as good as this, but let me just see.

Dave: 11:34

Like, the very first back test, I created something better than what I was doing, and I could easily see that. And it was humbling. Right? Here I thought I had all this discretion, I get spent all this, you know, time gaining experience, making this call each day about whether something should be on the list, and like, can't imagine that anything could could capture that awesome discretion, but it was like immediately, I found something better. It was easy.

Dave: 12:03

So I think that's I it was a little bit different, but it was clearly better, had more edge and more trades. Like, so the average profit per trade went up and the number of trades went up. So it was really clear to see that. And I think there's a lot of traders where there is one little nagging thing, like maybe one little decision they make that they can't imagine giving up. And that's it's a legitimate thing.

Dave: 12:36

I mean, that's that's part of their strategy. Like, that's what they do. But what you can do is, what if you had what if your life depended on you getting rid of that from your system? And, like, your life depended on having automation for this. You would make some just, you know, you might make some sacrifices.

Dave: 12:57

You might change the strategy a little bit, but it's gonna force you to get creative in a way that you haven't thought about before, and figure out a way to make this idea modelable in a way that and once you do that, if you're in the loop there, you will have a ceiling about how much how many trades you can make, how quickly you can enter trades. You are you are the bottleneck. Right?

Michael: 13:27

Mhmm.

Dave: 13:27

If you remove yourself, you are no longer the bottleneck, and you have so many more options for scaling your strategy, new ideas, new strategies that you can incorporate into your business that you just simply can't do when you're click trading.

Michael: 13:44

Because I I I do believe, and this is partly because, you know, I think I felt this way as well, where there is a a worry about, okay, if I am if I'm taking myself out of the equation, right, am I useless now, right? Yeah. Is there but I found it's kind of reframing yourself. This is this is something I think AI has taught me a lot of as well. I caught myself the other day, I've got, you know, just one giant monitor here.

Michael: 14:16

It's like 37 inch, just whatever. I caught myself. I just had four different AI windows open, and I'm just communicating with all of them. And I'm like, it hasn't made me less useful. I'm now just I'm I'm actually like a CEO.

Michael: 14:35

I've got this guy over here who's doing some marketing research, and I get this guy who's testing something, and this guy who's running some automations that I'm I'm trying to to hammer out. And it was the same thing with trading. It's like, I wasn't replacing myself, I was just upgrading my role. And as someone who spent about ten years in the hedge fund space, it's not the the hedge fund manager, the portfolio manager who's making the trades. He's saying, listen, we think Apple's gonna go up for the next six months, and then he walks out to the desk, and there's a a couple guys there with who are technical analysts and and execution traders, and they go, find the best time to to buy Apple and and walk away.

Michael: 15:14

And it's thinking of it more like that, I think, allowed me to really kinda step in and say, okay, well, what I'm doing is I'm no longer the grunt who's sitting there hitting the buttons to try to make the trades. I can take a step back and I can say, okay, this is now, it's not my responsibility to do the trading. Right? It's your responsibility. It's my responsibility to come up with the ideas of what we are going to be trading and what we're going to be doing.

Michael: 15:40

So it's not a replacement, it's yeah. Just you give yourself a promotion, I think, when you become automated.

Dave: 15:45

Yeah. That's a great way to put it. And the analogy I think about is, like, being on a baseball team. Like, you're playing first base. You're making an impact on the on the team.

Dave: 15:55

You're a good player. But there's only so much you can like, you can't be the whole team. You can't. You're gonna have to have teammates. And but then imagine that role versus the general manager, where you have control over which players to put on the team.

Dave: 16:11

So very different role in a very you have a lot more say and a more power, and you can use your intuition to improve the whole team in a way you just can't if you're a position player.

Michael: 16:23

So it's the same

Dave: 16:23

sort of same sort of thing.

Michael: 16:25

I think that analogy might be better, because it might actually explain to some of the resistance that it's the it's the player on the field that gets the the credit. You know, it's the player, you know, the the no one, no kid has a poster of a general manager on his wall. Sure. It's like so maybe it's some of that as well that, you know, when you think of and probably when you got into it and you said I wanted to be a trader, you know, the the vision of the guy, you know, you hit a button and then you sell a minute later and you just made a $100 and you're hooting and hollering and doing whatever. So there's part of giving that up, knowing that that's the the kind of glory the glory role.

Michael: 17:08

Right? It's not the it's not the thing that everyone kind of dreams about. Oh, I, you know, spent forty hours kind of back testing and refining a strategy, and now I push that off to something else to do. And that might be part of the resistance that people have as well, is that the other they're, you know, imagine going to a pitcher who really loves pitching and saying, do you wanna be a general manager? There might be some ho about taking himself off the field and away from the glory and and that type of thing.

Dave: 17:38

Yeah, for sure. Yeah, no doubt. Alright. Let's go to the next mistake. And again, we're we're progressing down somebody's trading career.

Michael: 17:50

Mhmm.

Dave: 17:51

So this is for somebody that is consistently profitable. What's the most common mistake somebody that's consistently profitable makes? And the the mistake is they think they've figured it out, and they think they think they don't have to adapt. And the harsh truth of this, and the hardest part of training, is you will have to adapt. And if you don't have a process in place for that now, it will come at the most inconvenient time for you.

Dave: 18:31

You will be forced to adapt at the most inconvenient time. So, you know, I've experienced this myself, you know, I had this strategy, I'd automated it, it was working great. I thought, well, I figured it out, right? I've got this little niche, this is how trading works, and it's the the market will tell you that it's time to adapt, but so you have to stay ahead of that, and you have to be constantly coming up with new ideas, new variations, new alterations to your strategy, completely new ideas, because it's gonna be way easier to adapt and switch when you've been doing that the whole time, and you're not just you don't just wake up one day and say, wow, my strategy no longer works. This thing I've been working on for years, this thing that's, like I've said before, put my daughter through college, now it no longer works and I'm caught flat footed.

Dave: 19:33

That is a terrible feeling to have, and that's why you you before you feel like you need to, you have to be adapting all the time. And that's what

Michael: 19:43

I see

Dave: 19:43

traders having a lot of difficulty doing or feeling like they don't need to, and you have to be doing that all the time.

Michael: 19:52

Well, I liked what, you know, the at the end there, what you're saying all the time. Because I I think that is the solution, is that if you I think people look at it as, okay, I I build a couple systems, those work well, I just coast for a while, and then shit hits the fan, and I go back to it, and I just fix it from there, and I and I continue to go that way. But I always look at that as that's very likely the wrong way to do it. If it's a if it's a constant process, then it seems like it's always way less of a deal. You know, if if it's a Mhmm.

Michael: 20:28

The ups and the downs are a little bit less and and it's more just smoothed out because you're just constantly working on the next thing. And if that's just a never ending kind of process for you, you don't have to hustle as hard as you did in the beginning to come up with the first couple strategies. But if it's always just part of your, you know, I spend x amount of time or x period of time per week just focusing on building a new strategy or refining my current ones, if you never stop, then it never becomes that big of a problem. Right? It it only becomes a problem when you've coasted for long enough, and there's this whole kind of catch up that happens of, oh, everything's falling apart now.

Michael: 21:07

Now you have to deal with it. So that's been the biggest thing that I've learned with it is just just always be which you should want to do anyway, because if that's not the fun part for you, then it this might not be for you at all. Right? For me, the fun part is exploring what other people are trading and reading articles and coming up with new ideas of of things to trade and kind of pushing those out. And because I'm constantly always looking for the next thing, I don't ever feel like I'm I I ever have to do any kind of catch up.

Michael: 21:40

Right?

Dave: 21:41

Yeah. Yeah. And it's I mean, one thing I like to say is, the only thing harder than creating your first profitable trading strategy is creating your second. And I see a lot of traders that get stuck in that in that, you know, they think they've got one strategy that works. They think that's how trading works for them.

Dave: 22:02

And it's really hard to think about another idea after that, but you you're you're right. It's sort of like you have a trading idea muscle that you can't can't let get out of shape. Like, you have to keep it fit, so you have to be constantly thinking about new ideas. And it is easy to sorta coast, and it is a different mindset for, you know, coming up with ideas, and then, you know, trading and and coasting and, you know, having automation in place to trade them. That there's two different mindsets.

Dave: 22:37

But, yeah, thinking about your trading idea muscle, and keeping that in shape, keeping it fit, requires just like any sort of muscle, it requires, you know, a routine, a constant effort and practice to to keep it fit, and to keep it to keep you in the game, and that's how you're gonna be able to adapt.

Michael: 23:03

Yeah. And just like, I would say, you know, the the muscle analogy. Right? If you're training for an event, most of what you're gonna do is gonna be monotonous and boring and not that event. You know, if you're you're getting ready for, I don't know, a boxing match, you're gonna be spending most of your time lifting weights and and doing kind of that boring routine as opposed to really getting ready to go.

Michael: 23:30

And I find it's a lot of the same with building systems where most of the ideas that I come across are are crap and end up not being something that ends up going, but just the act of constantly out there looking. And it also should just, again, for me, it becomes easy, and I think it it should be for people as well when you realize that there's no way that you've tapped everything. There's no way you found the best trading strategy in the world. So there's a certain level of of comfort that happens, but there should always be and I guess this is why greed is is really is good in trading, because there's always like that, yeah, but I could make more if, you know, I find this next thing and I I keep pushing. I think there there is a moment of a big sigh of relief from going from having absolutely no idea what you're doing, probably losing a ton of money over and over again to, okay, now things are going okay, and I'm I'm making some, and, you know, maybe I can even pay some bills and or pay my bills with this.

Michael: 24:32

And that's a big leap. And then maybe, you know, you take a a month off and you you have a good time there. But then there should always be that, well, what if I what if I make the strategy twice as good? Or or what if I find another strategy that's completely uncorrelated and and just makes money when this one sleeps and and all of that. So there's that certain amount of kind of greed I think you always wanna keep with you where you're always pushing for the next thing.

Michael: 24:56

And that allows it to be much easier when something that you are doing degrades or or stops working, even if it's just for a period of time.

Dave: 25:05

I mean, the underlying thing here that is not be obvious to people, but, you know, if you if you have to adapt, you know you're gonna have to come up with lots of ideas, you know that the learn you know, lot of the learning that's gonna take place is after you get a strategy live. This should nudge you to not be a perfectionist about your back test. Like, get something live more quickly than you might tend to want to because of this, because you're gonna need more ideas. Most of the learning's gonna happen after you get something live. And because you have to constantly adapt, you're you should be you should probably lower your bar a little bit for a lot of the perfectionists in the audience.

Dave: 25:52

I know I have perfectionist tendencies. So but I see people getting stuck. Oh, my starting point's not perfect enough. I know I can adjust the starting point before I can before I need to, you know, before I can get this live. Like, it's probably good enough, and you can like, there's nothing about going live that would prevent you from making changes from that point forward.

Dave: 26:13

So you should be you should lower your bar a bit for that perfectionism about strategies.

Michael: 26:22

I think I've I think I've talked about the book a few times, but I do really like it for trading. It's golf isn't a game of perfect. I don't even golf. And I remember reading this because someone I forget who I really wish I get credit who told me to do it, but he said, this is a great trading book. You know, it has nothing to do with trading.

Michael: 26:39

But you could just tell by the title exactly what it is, is that in a lot of cases, going for perfection makes everything worse. Where, you know, you could just say it's overfitting or something in trading, but it's more like anything out there. I always look at it with most traders, especially the ones that are in that kind of perfectionist zone, and who haven't started yet. I'm like, okay, you're making well, most traders are making negative money. Right?

Michael: 27:06

And it's like, so you're either making negative money or zero money. And it's like, well, if you have anything that has any positive edge at all, even if it's, you know, near zero, it has but these trades have some EV in any way, or form, then then get to it. Right? Get get started as that is your starting place because you're gonna learn so much more doing than you will sitting and and trying to figure it out. Like, if you have an equity curve that slopes up like, at all, then try to get that thing reasonably live, as as reasonably quick as you can, because you're gonna figure out so much going on.

Michael: 27:48

It's like you've gone from most traders, 90% you can look at the math, I think it's 80 to 90% of traders have negative EV in everything they do. And then a whole bunch of those have zero. So if you have anything that's positive, well, you know, get to it and start there. And that that ends up being a place that you hammer out any problems and bugs or issues like that, but then also a really good source of motivation, even if it's your first, you know, $100 that comes in. You go, shit, that's Especially if you're doing step one, or the thing that we first talked about, which is automating your trade.

Michael: 28:25

Well, it's not like you're it's not you're not trading time for money anymore. You're taking a pool of money you had, and you've turned it into a little bit more money. That's knowing that that is possible, I think, a huge motivation to, okay, well, now, if I can make this strategy twice efficient, well, that's $200. If I can do it again, it's $400. If I can do it again, it's right?

Michael: 28:44

And very quickly becomes quite meaningful.

Dave: 28:47

Yeah. That's great. Alright. Let's go to the last mistake. And these this is the one that I see the best traders I work with make.

Dave: 28:59

So these are traders that, you know, 7 figure year traders, traders that are they're making good money. They are the best of the best. The traders that that are like this, they're they're they're it's not like they don't make mistakes. And the one the one mistake I see people make is they don't share enough. And what do I mean by that?

Dave: 29:27

So let me like, one of the best traders I work with, we were at a basketball game in Charlotte, and I was talking to him and I said, you know, tell me about your career. Like, would you do anything different over you know, if you could go back, what would you change? He said, Dave, I haven't shared enough. I would go back, I would share way more of my ideas with other traders. And I was like, wow.

Dave: 29:55

Okay. Why? Why would you do that? And he said, well, I know that if I had done that, I would have a steady flow of ideas coming back to me now, more than I do now. So he realized that pretty early on, but even then, he wished he'd have started earlier.

Dave: 30:11

And that doesn't mean, you know, share all your trades and share your strategy with anybody out in the world. It means creating a trusted trading group like we've talked about on the podcast before, networking with other traders, you know, friend of mine, Mike Bellafore, has a famous quote, you know, networking is a trading skill. Totally true. So the mistake is not sharing enough, and I'm so I've and I've got another mistake that I that one of the traders that I worked with made that was actually quite surprising to me. And it's related to sharing.

Dave: 30:56

So let me set the stage if I can. So I've created this Mabe kit mastermind of with traders that I work with. So I've got, you know, these are 7 figure traders, people that are on the path to that. A lot of these guys are trading for a living or on a path to trading for a living. And we have a week monthly Zoom call where we get together and share ideas.

Dave: 31:22

Like, that's that is what this is for, is to I've tried to create an environment where everybody's incentivized to create the to to make the group better. So that means sharing more, incentivizing sharing more. And so what I do is, I'll have members of the group each month, I'll sort of talk with them about them presenting a topic that I know they're really good at, or that they have a really unique take on. And that's what we've done for the first few of these. So and then, you know, they'll present the topic, I'll ask some questions, other people will ask questions, and there's just a lot of really good discussion about these, about the topic.

Dave: 32:12

And so in one about a month ago that we had, I hear the next morning from a trader I'm working with. And I'm not gonna mention any names because it's you know, I've created this as sort of a private thing, so I have to be careful about what I share because I'm incentivizing sharing among the group. And he said, Dave, I was blown away about what this person presented, like and this guy I'm working with, he hasn't had a losing month in several years now.

Michael: 32:45

Wow.

Dave: 32:46

He's a great trader, right? And after seeing what this other trader was doing on the call, he was like, man, I gotta I've done a couple back tests based on what's he saying, he's right, like, gotta I'm ready to basically, was ready to rip out everything he's done to try to be like this other guy, or try to do more stuff like this other guy. And I was like, you do not need to do that. Like, you have a really great niche strategy, multiple strategies around this idea. It's very niche, nobody's doing it this way, you've carved out a really nice thing for yourself.

Dave: 33:29

You should not be looking at over somebody else's shoulder and doing what they do. Like, you've gotta So what I see is a lot of traders don't realize how good they are. Mhmm. And it's you know, sometimes, you heard the expression, you can't read the bottle. You can't read the label of a bottle if you're inside.

Dave: 33:49

You have to have somebody else on the outside to see to read the bottle label for you. And I see this a lot with traders. They don't realize how good they are. And in this mastermind, which is really an awesome situation, but it was a mistake that I did not anticipate somebody making. So it was just very interesting to see that, and it underscored just the fact of how good he is, and how instead of like completely copying somebody else, even at the highest levels, incorporating other ideas into your process.

Dave: 34:33

That's how you should be approaching this.

Michael: 34:36

Well, that I think also goes back to, you know, step one, or the first thing we talked about again with automating. The more you automate, the more you can when you hear a new idea, when you hear a new concept, as opposed to saying, okay, I need to kind of wreck everything and and start again, you've heard that new idea and you say, oh, I should be able to do that additional too. Because once the process of of automation is completed, the amount of actual time you are spending trading is minute. It's, you know, should be near should be near zero, right, if if you're doing it right. Reconciliation and and watching charts and reviewing things and stuff takes a little bit, but the amount of time you spend trading should be that near zero area.

Michael: 35:26

So then you can go to it and say, well, I you know, I was in this mastermind or listen to this podcast or whatever it is, however you did it. Say, I heard this good idea. It's not time for me to jump ship and and do what I'm doing because that should be systematized and and automated and everything back there anyway. So that should just be kind of your your safe space, your kind of ground zero. And let me, you know, take a little bit of a root out of that and start to do more.

Michael: 35:54

And the only limitations there shouldn't be time, it should just be capital. So maybe it means, you know, that money that you wanted to withdraw to, I don't buy a new car or do something like that from your trading account, maybe you gotta spin up another trading account. Right? And and, you know, start something small in this in this other niche. So I think it all does come back to that that automation where you can say, well, I can take on way more.

Michael: 36:21

Or imagine giving that to a discretionary trader, someone who spent the last ten, fifteen years focusing on this one tiny little niche, then he finds an amazing idea somewhere else, he is literally left with the only choice of continue doing what he's doing or do that new thing. He can't he can't do both, whereas as systematic traders, can say, okay, that's cool. I have this thing. Yes, I'm gonna be taking on more work, but it should be, you know, going from like, you know, a couple minutes a day to a couple more minutes a day when it's all said and done, as opposed to going on six and a half hours a day to another six and a half hours a day worth worth of work.

Dave: 37:01

Yeah. So I I love these two episodes that we've done. I think I just it does really feel like one approach to take, which really love thinking about, is like, just don't make the mistakes. Let's identify the most common ones, just don't make them. It's kinda easy when you think about it that way.

Dave: 37:26

Of course, it's not really easy, but it's it's a nice way to think about it. It's a good mindset to to have to say, okay. Let me just figure out the most common mistakes traders make, and don't make them. Try to avoid them. So I think that's I I I really like the way this this came about, and, yeah, I think that's a that's a good path to be on.

Michael: 37:52

That that that made me think, and I'll I'll leave this as the kind of closing thoughts. I don't know why didn't think of this earlier. But I used to sit next to this guy when I used to trade at a physical trading floor, who was from the the pits. Right? He was a floor trader back in the day, and he had moved up here, and he was one of ones that was opening the office.

Michael: 38:14

And he had a a physical kind of notebook like this one. And all he did every day is he sat down, he drew a tea table, and he labeled one side shit that worked and the other side shit that didn't work. And I just asked him about it one day, and he's like, well and he just showed me the piece of paper. He's like, I wanna come in tomorrow, and I wanna do more from this side, and I wanna do less from this side. So it was very like rudimentary, of course, as as someone out there who is trying to make his way from, you know, a different trading environment.

Michael: 38:45

But yeah, it's kind of the same thing. Right? If you make a handful of mistakes, that's really one of the easiest ways to do it is just write it down and just try to figure out how to not do it again the the best you can. And then that's super simplistic, but that's really what we're getting at is that if, you know, if you're falling into one of the mistakes that we talked about, great. Hopefully, we have identified it for you and given you some ways out.

Michael: 39:09

But even if it's something completely different, then just do the just focus on that and just think about sometimes it's not about coming up with the next amazing idea, it's about not screwing up a number of times that really ends up pushing the needle.

Dave: 39:23

Yeah. That's that's a great way to put it.

Michael: 39:26

So, as always, appreciate you guys for all the comments and the likes and all that stuff. And I'm Michael Nauss.

Dave: 39:34

And I'm Dave Mabe. Talk to you next week online, your own Pockets.