Logics Trade

By Frank Marquez

At a time like this after covid and waiting for an unexpected war that is still going many investment vehicles like stocks, futures, commodities, ETFs, crypto and NFTs, mutual funds and lets not forget options opened its doors to the retail investor and anyone interested in investing even a dollar if that's all they had. With this book I teach where and how to invest that dollar or a million in the most logical way. I guide you on how to options trade. I help you mold your mindset and tighten your risk management so you get paid. Have you ever wanted to try trading but saw all those colorful graphs and just walked away with a confused look in your face. This is Logics Trade, after you read this book you will interpret those graphs, learn how to manage your risk, come up with strategies that work for you and improve the positions in your trades.

• Language: English
• Publisher: Frank Marquez
• Release date: Oct 10, 2023
• ISBN: 9781801289481

Book preview

Chapter 1: The Psychology of Trading

Once your mindset changes, everything on the outside changes.

-Steve Maraboli

The Importance of Your Mindset

If you ever hope to trade successfully in the market, many skills are required. The most important tool you can have is the mindset you carry. It defines your reality and your trading framework. It defines all further actions and is the foundation for making your decisions.

Remember, you can have many perks and tools. Still, the decisions you make ultimately define your potential success. All your other tools can be rendered ineffective if you do not have your head straight on. With the right mindset, you can grow even if you work in a sub-optimal position with limited privileges.

Having the right mindset means you need to control your emotions. Don’t get overly or emotionally connected to your prospects. They are just the tools you use as vehicles to reach your final destination.

A car helps you travel from point A to B, so we invest in buying one. However, knowing that the destination means more than the car we have is imperative.

If you spend all your time getting the best car and ignoring the destination, you will never achieve your end goals. Your vehicle is transitionary; you will use it one day and then switch to another the next. The only constant in this equation is the destination, success in the trading market.

Learn how to focus on what you want by eliminating the noise from the rest of the universe. It is the only way to focus your limited energy and time to give you the best possible results. This connects with the next point in the mindset approach: being nimble.

Ask anyone who has traded about the market, and they will tell you it’s a volatile beast. Even amateur traders know you can’t expect the market always to behave predictably. This is linked to the nature of the market(s), trade transaction(s), and official regulations. Different trading activities change the market dynamics. Think about the 1929 market crash or financial crisis; you will remember that losses can turn from unfortunate events to blessings in disguise.

Furthermore, new laws and regulations are being constantly passed down. Some may view these as a general hindrance to their trading efforts. However, this is not always the case. Sometimes, the law makes things easier and creates an ideal state ripe for aggressive expansion.

To that end, you must stay on your feet and keep your ears to the ground. This way, you can make quick decisions to adapt to the changing circumstances of the market, and the Jumpstart Our Business Startups (JOBS) Act is a great example. Specifically, it allowed entities to engage in crowdfunding.

Crowdfunding acts as a perfect opportunity for someone trying to raise money to inject much-needed capital into their venture.

Now imagine these events occurring across an unspecified time frame. You stand to gain or lose ground based on your ability to think and be agile. The market is flexible, and you must be, too, if you want to optimize your vehicle for success. Observe the market and consider how to use the current layout to benefit your business venture. In case of a potential detriment, you can sidestep the problem. At the very least, you will be able to minimize the fallout.

To balance this equation, you also need to exercise discipline. A runaway decision-making process can be just as deadly as sitting idle and not doing anything.

Each decision you make has an impact, small or big, but it is there. Even small problems can lead to major inconveniences if you are not careful in your approach. It would help if you were deliberate and sure about your decisions.

Sometimes, this can mean exercising control over your wants and looking at the best for the overall objectives. Discipline will help you temper yourself against making random decisions based on chance, luck, or factors outside your control.

These basic skills are necessary to form a positive trading psychological profile in your mind. Remember, the only person that matters is you. You are the one making the decisions, and you are the one reacting to the market. Things are as they are, but the decisions always go through you.

The industry does not dictate how well you do in the market. Your success is determined by yourself and the trading education you possess. We can choose to play whatever game we want in this market. However, we cannot change the rules. We must abide by the rules of the game we wish to play. It then becomes a matter of choosing the right game for your skillset and talents.

You cannot change the board to be in an ideal state. You will have to work with what you get; we all do. Don’t make the common mistake of blaming things outside of your control. You cannot do anything to alleviate such factors. At best, you can compensate for them by taking preventive measures. What you can’t do is blame them for your failure. You need to have a solid risk management strategy to help you compensate for potential losses, meaning trading with an approach that minimizes the overall risk exposure for your trading activities. Risk comes with the chance of a bigger profit, but it can just as easily go south.

Remember, your trading turns into nothing more than a glorified gambling exercise when you trade without a risk management plan. Just like with gambling, the house will always win in the end. Nothing is more bitter than working hard and climbing those steps, only to fall to the bottom because you made a mistake and could not recover from the fallout. Don’t be the guy living on the edge, gambling away his money because he feels he’s too lucky to get caught in a streak of bad luck. Think about the 2008 financial crisis. People were jumping off from high-rise buildings because they had lost everything. Don’t let that become your situation; develop a risk management strategy.

What you believe dramatically affects your outlook on life and, definitely, your trading. Most people fail because they make poor choices or have a poor outlook on life. 80% of millionaires in this country are self-made, with no inheritance. The poor class sees success as something obtained through pure luck. They view their opportunities as trivial. In some cases, they see the possibility but not the probability. When you are young, you are especially impressionable. People have a belief system that has grown in their mindset since childhood. Children’s minds are like sponges. They imitate what you do and believe in what you