The author below is quickly becoming one of my new mentees to watch. As a student of elite performance there is so much right about this email. The work. The concentration on improvement. The self-reflection. The detail to his learning. The depth of it. New and developing trades too often seek to copy the trades of that big trader. It would be wise for you to copy the work, mindset, and competitiveness of this new trader if you goal is to become that big trader.

Hi Bella,

The following is my weekly review from October 3, 2011 to October 7, 2011:

Friday was one of my better days in terms of consistency and probability. After reviewing my trading, I noticed several things I did differently:

• Having a time stop: scratch a trade that does not work for me after a given period of time
• Being ultra-selective: trade only Radar/In-play stocks, which haven’t moved out of their ATRs, and still have rooms to go
• Covering risks: initiate with 2 lots on higher R/R setups, and covering risks with 1 lot into the next upmove/downmove
• Internalizing “second rat gets the cheese”: it’s okay to miss the first 20 cents; you don’t have to be the first one in. Let them do the battle, confirm the price action, and then I enter with more confidence

Of course, one-day data cannot make a conclusion on my results, but they will be something to keep in mind for the following weeks.

Several things I picked up this week, and things to remind myself in my trading game:

1. If you get stopped out a lot in a stock, ask what’s the real stop? Is your bias wrong?
2. Always know what time will big/important economic numbers come out.
3. It is not 2008. Know where has the market come from, and what is your risk/reward in today’s market.
4. If you see SPY touching too many prices, and you weren’t making money on both longs and shorts, you should slow down and see where is the market now in longer time frame.
5. Consider how you could have traded the bounce better.
6. If you hit the decrementing big bids as a momentum lot, and buyer rebids, you have to get out right away. You can easily be squeezed out by algo.
7. To add to above, you should always have a time stop. You do not treat momentum lot as Trade2Hold, and set a stop too far from the entry.
8. To add to above, stops for momentum lot is time stop, stock slows, or ticks against you.
9. To add to above, unless it really moves away quickly from your entry, then you can consider putting a price stop.
10. Quality not quantity. The bigger day will be where you crush your setups in 1-2 plays.
11. Don’t over trade levels during mid day. Algo can easily outplay you with above/below program. Rather, look for a level to hold during mid day.
12. If you miss a trade, you miss a grade. It is worse if you get in at a bad price, and you couldn’t manage your R/R.
13. When playing slow grind up, you really need to find a great price to reduce your stress level. You can easily get shaken out trying to play breakout. The better play is positioning yourself against a good stop.
14. To add to above, the better way to trade is taking profits into the upmoves and downmoves.
15. To add to above, remember, there were too many occasions where I was 25c in the money, trying to hold my slow grinding position, and eventually had my positions went against me as time passed by.
16. Know ATR. Be careful when stock does 2x ATR already. Re-evaluate your R/R.
17. You should look for longer consolidation to initiate trade if move is already extended.
18. Don’t trade everything. Don’t take every trade. Focus on better setups.
19. Don’t trade SPY unless it’s a big level. It’s difficult to fight with programs with ticks. Trade SDS instead for areas of support/resistance.
20. Don’t be too tight on good plays.
21. Put more risks on higher probability trades, which have all the checks on your side: trend, tape, technical, fundamentals.
22. Put less room on lower probability trades.
23. Get better in your playbook setups!
24. Be careful of whole number trap. Let them have the first 10c-20c. You want to short below the real level, or long above the real level.
25. Patience. Wait for your setup. You don’t have to be the first one in.
26. Instead of getting in/out, and risking so many 2c, 5c, 6c, find a best spot and risk 20c (real stop) on better setups.
27. Don’t trade a against a trend thinking you’re fading resistance. You want to see failure at that level first, unless it’s a big big level.
28. Sometimes if you like a price, you can wait for it to stabilize before placing a bid/offer in. You’ll get more info and confirmation. Or you can put a very small position as a feeler.
29. Don’t trade minor levels in every stock. Trade clearer levels in better stocks, with fresh order flow.
30. You need to find something that can trend for the rest of the day. Be selective on stocks. Spend your attention on this. Don’t be in a stock if you just want to make 30c-40c.
31. To add to above, when you have an idea for an entry, ask: “Is it worth your time for that trade? Is it going to trend?”
32. In an uptrending market, shorts are scalps until market proves it’s a downtrend.
33. Trading is not about trading every minute from 9:30am to 4:00pm. Trading is about taking good trades. If there’s no good trades, don’t over trade. You’re wasting your time, energy, and money. Do not be stupid.

To add to above, do not be delusional and think that you’re making One Good Trade. Think twice on what kind of trade you’re making. Is it really One Good Trade?

Bella

One Good Trade