Analysis Paralysis – Part 5 – Models to Follow

By Dr. Van Tharp

“Experience tells you what to do; confidence allows you to do it.”
–Stan Smith

Now, let’s close out by looking at a trader who has found a great balance that works well for him.

I’ve known Brad Martin since 2000. Brad spent 14 years as a floor trader at the CME and CBOT and now has been trading six years as an electronic day and swing trader. I’ve had the opportunity to trade with and model Brad’s trading strategies since 2004. The fruits of our efforts have resulted in two really incredible workshops that we teach together.

Brad is the type of trader who almost never steps on his head. I’ve never met another trader who acts with more confidence and ease at his decision points. There are several good reasons for this, so let’s explore them a bit.

Brad knows exactly where he’ll get out if he’s wrong, before he ever enters a trade. This may seem like a simple thing, but Brad has an unwavering sense of capital preservation and he uses strict risk control on every trade. His dedication to preserving his capital is so ingrained that he never has to think or analyze anything at his decision points. The decision was made before he entered the trade.

This absolute “get out point” is actually very liberating. While Brad doesn’t like being on the wrong side of a trade, he knows that it’s part of his business and he does a great job of making his losses impersonal, neutral events.

Brad has a plan. When Brad enters a trade, he knows exactly what factors will cause him to get out of a trade early, what things will tell him to stick around because the move could continue in his direction, and more importantly, what things are not going to influence him one way or the other.

One insightful workshop attendee told the group that the amazing thing about Brad’s trading style is not the indicators and factors that he looks at, but rather all of the things that he chooses to completely ignore!

Brad knows the factors that give him an edge; he pays close attention to them, and doesn’t let outside distractions influence him. Brad has confidence that comes from knowing his strategies work. For many people, this seems like a simplistic statement. But I believe that most people who struggle with their trading do so because they don’t believe 100 percent in what they’re doing. Brad makes decisions look easy because they are easy for him.

Tiger Woods consistently drains tough putts in pressure situations because he’s done it before. He has a mental and physical routine that works and is proven. The same can be said for Brad’s trading. Tiger doesn’t sink every putt, and Brad doesn’t make money on every trade. But what they both do works, and because of their confidence, neither of them has to over-analyze the situation when it happens in the heat of battle.

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