three simple ideas shared in this video
can dramatically improve your trading
results hi I’m Mike bellafiore
co-founder of SMB capital proprietary
trading firm located in midtown
Manhattan and I’m also the author of the
trading classic one good trade and the
PlayBook in this video learn what it
elite active traders are doing to
succeed that perhaps you’re not
[Music] one of the things that I’m fortunate
enough to take advantage of is that I
get a chance to talk to a lot of people
who are trading inside outside the firm
I get to see all of your work I get to
see all of your performance all the
performance of the guys here and outside
the firm and there are really three
things three themes for people doing
well that keep coming up around this
holiday season from this trading year
looking back at this trading year
overall and one of them reminds me of
something I heard you say on the desk
today which we’d talked about and you
guys are gonna go live relatively soon
so let’s just let’s just share what’s
working for some of the big guys and
give you some thoughts to think about as
you’re starting ready to take particular
lives and build your career out
so the first thing is trade less and so
I heard you he’s not gonna be on camera
is he
I heard you max who will not be on
camera saying today and I hope that you
were saying this jokingly but I think
you said something like I’ve already
been in and out of 13 stock
it’s like 9:45 so yeah I mean one of the
things that the best active
traders are doing is they’re actually
trading less and so Peter Brandt had a
good quote recently on Twitter which
I’ll mangle but he said something like
you know a high percentage of his
profits were coming from a small
percentage of his trades and as guys get
bigger that is certainly true there’s
the there are these moments during the
month and during the weekend during the
year that we can go back to and we can
point to where most of their profits are
coming from if you want to learn three
real-world setups that our traders use
including the simple setup that we teach
all of our new traders and the setup
that turned one of our traders into a
seven-figure
big money earner check out the free
webinar that we’re currently running
just go ahead and click the link that
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right hand corner of your screen that’s
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page in the new window so don’t worry
you’re not gonna lose this video you’re
gonna learn more in a couple of hours
from this trading workshop than from
years of online education what was that
huge low-flow runner whose symbols we
probably already forget hey r-tx
that was a really big opportunity and
the in this month and then we had
actually talked about that as well a
little bit about this the second point
that keeps coming up but K R T X was was
a big moment and for us it wasn’t a
particularly good moment to start the
month a couple of our really big traders
started down like $300,000 because they
got on the wrong side with that KRT acts
got short when their system called for
it and then there was just no liquidity
they were big when their system called
for short they got really short and then
there was like no acquitted they
couldn’t get out and they there’s some
traders here who started down literally
three hundred thousand the first couple
of days of the month they’re all
positive by now you know what are we 20
days in 25 days in so they’ve they’re
able to make it back but that’s you
don’t want to start down $300,000 to a
month no matter how good you are as a
trader but that was still one of the
moments long and then getting short
right for this month you know when you
think about this this year it I was just
at lunch today and talking to a trader
who it’s not necessarily a breakout
trader by any means experienced trade a
pretty good trader overall guess where
he made the most most of his money this
year in US markets
a trader and in the same product that a
trader who isn’t particularly very good
at swing trades who I coach made a ton
of money in us in a swing account he’s
like literally trying to learn how to be
a swing trader and the same trade and
the same product appeared to him and he
literally made millions this trader in a
swing idea and he’s like not even a good
swing trader and this other traders just
at lunch today he’s telling me about
like how much money he made and it’s one
particular idea that came to him anyone
want to guess that was a good one too
and that was so shark when he talked
with you guys he talked about how that
was his best trick I’m pretty sure he
said that was the best trade ever
or I think he said that was this biggest
trade ever so that was a big opportunity
that that short from after we had the
gap up that McDonald’s was going to
offer be beyond in Canada ever since
then that was like the best short of the
year made that huge gap up and then it
like never went up ever again but it was
in gold
yeah the gold breakout was anybody could
have traded that like people who aren’t
good swing traders crush that and so and
that was a that was a big opportunity
people talk about the queue comte raise
this year if you look across prop desks
it was probably the most profitable
trade the particularly experienced prop
traders made so there are these moments
we have to go through every single
example but beyond is another good one
there are these moments there are these
pockets where you can make a lot of
money so and that’s why you guys do
that’s why you guys use traitor view
tagging your trades getting statistics
on what your trading well understanding
what your going to trade more of and
what you’re going to trade less of
that’s why you guys will come and sit in
this training room with doctors
S and Carlton to myself and we will
have a monthly meeting and you will be
attached to a trading team and we will
you will present how you did for the
month backed up by your trading stats
that you’re measuring in trade review
and we will say things like you know
what you trade well what were those
trades did you trade breakout trades
well did you trade mean reversion trades
well did you trade consolidation trades
well did you trade technical trades well
did you trade second day play as well
did you trade breaking-news trades well
we’ll have those stats and we’ll work
from there we’re not just gonna sit
around and say I think that I’m
particularly good at technical trades
we’ll show it I think that I can be a
really good breaking news trader well no
you can’t if you’re trading stats stink
but and and what happens is that people
get surprised by how good they are at
certain trades and how bad they are at
other trades because in real-time we
tend to over value our losses and we
tend to over remember our wins and so
the trader views sorts all that out and
so we’re not going to max we’re not
going to I actually hope we don’t even
joke about that
going forward okay noted but if you were
in 13 trades in the first 15 minutes we
would see it and Carlton would have a
very unfriendly talk with you and one of
those back offices that I’m not even
allowed to listen to what he’s actually
saying to people because I understand
they’re unfriendly so but that you’ll
sort of go through that you’ll see hey
I’m over trading these ideas and and I’m
on to trading these ideas but that’s a
theme trade less trade less trade less
trade your best ideas the second thing
is and and it’s it’s contradicts what I
said about some of our best traders who
started down $300,000 this month but
that was a route that was an anomaly
anomaly which is really good actively
traders are working on drawing down less
there is this thought that when you get
to be a big trader you have to push your
risk you have to risk more to make more
it turns out if you talk to some of the
top traders at our desk what are they
working on they’re working on drawing
down less they’re working on drawing
down last in some of their kryptonite
some of those plays that they know they
don’t trade particular well and when you
are really big trader particularly if
you’re trading low floats or things that
are bought off you’re really a big
trader it’s very easy to sort of dip
your toes into the water with an idea I
think something is oversold I think
something is overbought and you know you
start and you get short a couple
thousand shares and you got into early
and you kind of know it and you’re down
five thousand dollars and if you get
sloppy you know what do you do if you’re
a big trader if you’re in one of those
sloppy moments you just sort of say I’ll
trade out of it very common I’m gonna
trade out of this five thousand dollar
loss and I’ll just put some more on
it’ll come in a little bit I’ll break
even and I’ll move on
so they put on an extra three thousand
shares and you know they’re just kind of
putzing around they dip their toes in
they got on the wrong side of it and a
little bit of a little bit arrogance
heaps in a little bit of laziness sleeps
in and then they turn a little bit of a
loss into now they’re on the wrong side
of it and now they’re down twenty-five
thousand and now they’re mad at
themselves because they’ve turned this
c-plus idea into this twenty five
thousand dollar loss which is a lot for
anybody and they try and trade out of
that and then it becomes a fifty
thousand dollar loss and and and worse
and they put up a negative hundred
thousand dollar day and there was no
need for any of it and so you know there
are certain triggers that get people to
do things like that even when they are
elite traders and they’re reaching out
the doctors team Barger and working on
that and they’re including me on that
and trying to figure out how they can
stay away from that and their cluing in
our floor manager to watch them once
certain things start to go wrong but
it’s not but it’s not I want to have a
bigger risk appetite so I can make more
it is let me make sure that I can cut
out some of these negative hundred
thousand dollar days because that adds
up even for a big trader
and if I can get rid of a couple hundred
thousand dollar lost days in a month
that are unnecessary that that’s it’s a
big turn and you know one of the guys
who I coach outside the firm who’s
really just a tremendous trader one of
the best active traders that that I know
probably in the country his one of his
major themes this year has been he wants
to draw down less on his worst days he
would have some massive rips on his
worst days still would put up a huge
number four million plus in P&L; for the
year but he would just have these
enormous negative down days and his
thing this year is let me get rid of
them now his focus is not I want to risk
more his focus is I want to make sure
I’m losing less of my worst trades so I
know when you guys start and I know when
you guys are even early in your career
we’re gonna talk to me we’re gonna be
talking to you about bumping up your
risk we’re gonna be giving you more
buying power giving you more risk and I
know you’re gonna be sitting there
thinking man if these guys just let me
draw down 5,000 intraday or $50,000 for
the month like I’d be the best trader on
the desk like the reason why I’m not the
best trade in the desk is because
they’re just not letting me draw down
enough right now yeah I know you’re
thinking just like forget that injured a
loss limit of whatever it’s going to be
multiplied at times 20 and leave me
alone and that’s it’s just ironic that
the the biggest traders who really do
have $150,000 worth of
intraday risk that they’re allowed to
use they’re not that’s not their focus
so you know we’ll bump you up but it’s
just understand that the best guys are
toning it down and and and there and
what that really means is that when
they’re right they’re right right away
and when they’re wrong they’re wrong
right away so well let’s let’s let’s
work on that and then the other thing is
I hear this a lot from you guys
particularly on oh I got out and the
stock kept running we’re in a strong
market I think we talked about dicks the
other day and I mean it just couldn’t do
anything but go higher all day long and
I know some of the guys in the desk were
long and they were like I left some
money on the table we had that huge
Disney breakout we made some money on
that lots of guys thought they could
have made a lot more that breaking news
trade when Disney came out and said
there’s more subs than we thought huge
breaking news trade and some guys felt
like they lost some money on the table
but free for you guys to be thinking
about that I think this is undervalued
at the start of your career which is you
want to if you can try and be systematic
about how you’re going to get out of
your best trades and so lots of times
people feel like they can’t think that
way or they can’t create rules like that
and the rules are gonna be different for
everybody but you should start trying to
do that you should start saying to
yourself well you know a simplest thing
I’m gonna get out when it gets below
view up I’m gonna get out when it holds
below its previous high consolidation
area I’m gonna get out when it breaks a
particular trend line I don’t care what
the rule is you draw our although those
are important but let’s try and quantify
that you know go back and reverse
engineer your best trades and see
if you can start to create a framework
of rules to get out and work with that
because that’s gonna allow you to get
bigger and I can just tell you that
there are very very large traders that
we get to work with and one of them
really does trade with a lot of
discretion shark really does trade with
a lot of discretion and as he said to
you guys recently that is best for his
personality he is he is you know he’s a
really good feel for the marketplace
that’s that makes sense to him but that
really isn’t true of everyone else who’s
really big who we work with it’s
probably a testament to his natural
abilities natural trading ability is
natural feel for the marketplace and we
certainly wouldn’t tell him not to tap
into that he should that’s what makes
them great but for everybody else
they’re they’re writing rules and these
are very very big traders and these are
guys with hundred thousand share
positions own and plus so we’ll start
we’ll start thinking about that alright
so trade less the reason why you’re not
making a hundred thousand dollars in
your first month is not because we’re
not letting you draw it out more and and
and with trade less that means yes not
thirteen stocks in the first fifteen
minutes and be more systematic about
your exit rules now it’s your turn
which effective trading technique
discussed in this video are you going to
implement into your trading are you
gonna trade less are you going to be
more systematic or perhaps you’re gonna
focus on losing less and your worst
trades let us know about leaving a
comment below right now