The Trading Mindwheel

An incisive and actionable guide to trading success

In The Trading Mindwheel: Eight Essential Skills for Trading Mastery, Michael Lamothe delivers a hands-on and practical roadmap to personal investing success. In the book, you'll explore the belief systems, mindsets, and market psychology you need to master to maximize your investment returns. You'll also learn to analyze trades, markets, and risk as you manage your portfolio and continuously improve and validate your own skills.

You'll also find:

• Ways to use journaling as a roadmap to continuous personal improvement
• Strategies for using post analysis to validate your own skills and trades
• Methods for managing individual trades and portfolios in a way that limits relevant risks

A can't-miss resource for anyone interested in trading, investing, finance, and personal wealth, The Trading Mindwheel: Eight Essential Skills for Trading Mastery belongs on the bookshelves of people seeking to build wealth.

Foreword xiii

Introduction xv

Prelude xv

The Start of Something Life Changing xv

Philosophy of the Trading Mindwheel xxii

The Axle Mindset: Beliefs, Belief Systems, Emotions, and Habits 1

Jesse Livermore’s Story 2

Mindset Is Everything 3

Taking Inventory of Our Beliefs 3

2 A.M. Wakeup Call 4

Deconstructing Beliefs and Belief Systems 6

Write Your Beliefs 9

Emotions and Emotionality 14

The Marathon 15

Healing Wounds 16

When White Knuckling Fails 18

Meditation Is a Marvelous Tool! 21

Seek Clarity 22

Equanimity 33

Spoke 1 Journaling: Step One of Accountability and Continuous Improvement 35

What to Journal About 37

Types of Journals 44

Trading Routines 46

Spoke 2 Analysis: Analyzing Trades and Markets 55

Three Things I Learned the Hard Way about Trading 56

Analyzing Trades and Analyzing Markets 69

Influences and Studies 72

Fundamental Analysis: Defining Our Universe 74

Defining Our Setups 86

Developing a Funnel 96

Analyzing Markets 96

Spoke 3 Risk: Initial Capital Risk, Position Sizing, Potential Reward 107

Risks Involved in Risk 109

Mindsets Needed for Risking Capital 115

Ways to Effectively Manage Risk 122

Spoke 4 Trade Management: Managing Risk throughout the Life of the Trade 137

Life Cycle of a Trade 139

Beginning of the Trade 140

Four Types of Exits 143

When to Sell in Stages vs. When to Sell It All 154

When to Add 159

Dealing with Earnings Announcements 163

Spoke 5 Portfolio Management: The BIG Picture and Assessing Our Total Risk 165

Assessing “Portfolio Heat” 166

Paul’s Story 168

Setting Up Circuit Breakers 170

Spoke 6 Post Analysis: Step Two of Continuous Improvement 173

What to Include in Post Analysis? How Long and How Often? 174

Getting Organized 176

Three Habits That Will Help You Improve 179

Discipline + Balance = Sustainable Success 182

Spoke 7 Testing: Factor Modeling, Back Testing, and Forward Testing 187

Factor Modeling 188

Back Testing 192

Forward Testing 193

Conclusion 197

Acknowledgments and Inspirations 199

About the Author 201

Index 203

MICHAEL LAMOTHE is the Founder and CEO of Mara Wealth, a company that coaches new and experienced traders. He has over 20 years’ experience in the financial investment space as an entrepreneur, trader, and coach, and has dealt in stocks, options, forex, crypto, futures, and commodities. He is the bestselling author of The MARA Mindshift Guide.

Many people try their hand at trading, only to suffer a few quick and consecutive setbacks that send them running from the field. Many more never try in the first place, worried about losing their nest egg with significant losses in an increasingly volatile market. A few, however, conquer their fears, find trading success, and build wealth. This book is about how to become one of those few.

In The Trading Mindwheel: Eight Essential Skills for Trading Mastery, renowned entrepreneur, investor, and coach Michael Lamothe delivers a practical and hands-on blueprint to personal investing success. In the book, you’ll discover the mindsets, belief systems, and psychological frames you need to adopt to maximize your chances of emerging victorious from the investing arena. You’ll learn to increase returns and reduce risk by analyzing individual trades and markets as you manage your portfolio and continuously validate and improve your trading skills.

The author explains how to use journaling as a roadmap to continuous personal improvement and offers strategies for using post analysis to validate the trades you’ve made and the skills you’ve developed. He also discusses how to manage individual trades and portfolios in a way that limits relevant risks and reduces your exposure to “black swan” events with the potential to negatively impact your returns.

An essential resource for anyone interested in finance, investment, trading, and growing their personal wealth, The Trading Mindwheel: Eight Essential Skills for Trading Mastery will earn a place in the libraries of retail investors, portfolio managers, securities analysts, and anyone else with a personal or professional stake in the financial markets.

Praise for The Trading Mindwheel

“Excellent! The Trading Mindwheel is packed with many practical steps needed to become a more successful trader. It’s perfect for anyone who’s read Reminiscences of a Stock Operator (Lefèvre/Livermore) and William O’Neil’s book, How to Make Money in Stocks, and is ready for more specifics.”
—Mike Webster, Portfolio Manager for a private fund, former Head Market Strategist for Investor’s Business Daily, and former SVP/Portfolio Manager for O’Neil Capital Management

“Mike explains trading psychology in a way that every trader can not only grasp, but instantly apply to their trading. The tips and techniques that Mike shares are not going to be found in some random online blog. Mike has such a unique way of explaining things that you’re sure to find value in every sentence.”
—Austin Silver, Founder of ASFX.biz and Host of The Day Trading Show Podcast

“In his book, The Trading Mindwheel, Michael emphasizes the vital role mindset plays in a trader’s ability to profitably execute a sound trading strategy. Top-performing traders know that achieving trading mastery first requires overcoming mental barriers.”
—Leif Soreide, 2019 U.S. Investing Champion and Founder of Champion Team Trading

“The biggest misconception new traders have when learning how to trade is that their technical or fundamental strategy will be all they need to become a successful trader, but without the proper mindset, they will never find success as a trader. The Trading Mindwheel lays out 8 essential skills that will be worth more to a trader than any technical or fundamental strategy they will learn.”
—Anthony Crudele, Host of Futures Radio Show Podcast