What do all of these things have in common? We took down our leaderboard at our firm a few months ago. Today one of our traders left early because he got stopped out. The other day I was interviewing a candidate for our desk who defined a good trading day by how much he made or lost. What is your answer?
Sunday on StockTwits TV I offered my definition of an optimal trading day. First I considered whether it should be defined by your P&L, whether you were Number 1 in the firm, your mental state after the trading day, or some other metric. I chose an answer that falls under the category of some other metric. I particularly eviscerated the argument that you ought to judge your day by your P&L. It made for some good TV as well.
Mike why is it wrong to leave after being stopped out? If I cannot trade then why stay? Because your goal for the trading day is not to make money. And your optimal trading day should not be defined by money. Your goal for the trading day should be to learn while improving and expanding your trading playbook and contemporaneously trading in the zone for at least 5 1/2 hours. (Go watch the video on StockTwits TV if you want a fuller description of my optimal trading day.) If you leave before the Close you have forfeited hours on the demo where you can improve and expand your playbook. Getting stopped out does not mean you had a bad day. But leaving early ensures an atrocious trading day.
New traders have got to stop trying to make money. It is sort of like that girl you know who really wants a boyfriend. The harder she tries to get one, the more she obsesses about landing one, the worse her chances. We all know we meet the people we were intended to be with by just living our lives.
Trading is about skill development and discipline. Great traders make money because their trading playbook is stacked and they are constantly expanding and improving it. Money, P&L, is just an outgrowth of a killer playbook.
I was interviewing a bright young trader yesterday who described trading as an activity where you either win or lose based upon your P&L. I gave him a hard stare. Each day is a learning opportunity. Each day can be successful if your goal is to improve and expand your playbook. In fact, you can have the best trading day of your career and get stopped out. Huh? Bella now you are really losing it. Say on this same day you watch the markets via a demo and add a new play to your playbook that you will crush for the rest of your career. That is a great day!
You can be better tomorrow than you are today!
Mike Bellafiore
No relevant positions
16 Comments on “Your Job is Not to Make Money”
Really enjoy the emphasis on trading mentality!
Really enjoy the emphasis on trading mentality!
I appreciated this post. This week, I’ve been at my husband’s side in the hospital. I had a laptop and a wireless card, and traded in simulation mode as much as I could in the ‘downtime’ between conferences with doctors, getting anything my husband needed, etc. Didn’t trust myself to trade live under the circumstances…but didn’t want to let the opportunity pass for practicing and learning, especially after having been on vacation (with no internet access) last week.
Given my husband’s health situation, the months ahead may have more weeks like this, but I’ll to do my best to keep improving…and if I flag, I’ll remember this post 🙂
Lavonne
I appreciated this post. This week, I’ve been at my husband’s side in the hospital. I had a laptop and a wireless card, and traded in simulation mode as much as I could in the ‘downtime’ between conferences with doctors, getting anything my husband needed, etc. Didn’t trust myself to trade live under the circumstances…but didn’t want to let the opportunity pass for practicing and learning, especially after having been on vacation (with no internet access) last week.
Given my husband’s health situation, the months ahead may have more weeks like this, but I’ll to do my best to keep improving…and if I flag, I’ll remember this post 🙂
Lavonne
Bella,
There were 2 great plays in AIG last week no doubt. How long a trader holds would probably depend on his/her personal characteristics. I am interested to know how long is the trade2hold for you after the breakouts; or did you get flat and reload numerous times during the 9 point moves.
On Aug 27 (Thursday), when AIG broke out of 41.5.
On Aug 28 (Friday), when AIG broke down from 53.5.
P.S. why dont you sit danny and dov next to each other and avoid all the neck pain
SXZTrader
Bella,
There were 2 great plays in AIG last week no doubt. How long a trader holds would probably depend on his/her personal characteristics. I am interested to know how long is the trade2hold for you after the breakouts; or did you get flat and reload numerous times during the 9 point moves.
On Aug 27 (Thursday), when AIG broke out of 41.5.
On Aug 28 (Friday), when AIG broke down from 53.5.
P.S. why dont you sit danny and dov next to each other and avoid all the neck pain
SXZTrader
I absolutely agree with this post. We are all but humble students of the market.
I love the fact that you can learn something from the market every single day. That’s really what keeps me coming back for more, not the money. The monetary component isn’t a terrible perk though.
I absolutely agree with this post. We are all but humble students of the market.
I love the fact that you can learn something from the market every single day. That’s really what keeps me coming back for more, not the money. The monetary component isn’t a terrible perk though.
Showing an example of what a play should look like in a trader’s playbook would make a great Sunday show. I always wonder if I have too much detail or not enough.
Showing an example of what a play should look like in a trader’s playbook would make a great Sunday show. I always wonder if I have too much detail or not enough.
Lavonne,
Hoping your husband is doing well.
All the best,
Mike
SXZTrader,
It is important to develop a personal system for your Trades to Hold. We are all different: tolerance for risk, buying power, trading experience, loss limits, etc. But you must have these trades in your playbook as an intraday trader.
Best of luck with your trading!
Bella
Learning about market structure & price action is far more important than making profits during the learning stage of trading
Learning about market structure & price action is far more important than making profits during the learning stage of trading
great post
great post