Hey Mike,
I was going through The Foundation today and came across your lecture at Indiana University. In it you talked about how traders tends to develop an inclination to particular types of set ups. I was wondering if you had any tips for discovering what kind of trading personality would best suit me. Or if it’s something that can only be discovered through experience and reflection?
SG
@MikeBellafiore
Terrific question. One for the trading ages particularly for new and developing traders.
In The Foundation and SMB DNA we will expose traders to many different setups. We do this mainly through our mentoring sessions where we review trades. Setups like (not an exhaustive list):
1) Fade Trades
2) Trend Trend Trades
3) Intraday Trend Trades
4) IPO Trades
5) High Beta Technical Trades
6) Tape Reading Trades
7) Reversal Trades
8) Opening Drive Trades
9) Scalp Trades
10) Microscalp Trades
11) VWAP Trades
12) Breakout Trades
13) Momentum Trades
14) Range Trades
15) Support and Resistance Trades
16) 2nd Day Play
17) Gap and Go
18) Short Trades
19) Market Play
20) Pullback Trade
SMBU students and traders on our desk are taught these trades and then asked to experiment with them in simulation mode and real-time. Traders are also asked to build PlayBook trades for the setups that make the most sense to them. In our training, we ask traders to master one trade at a time while trading live and be patient with their development. We encourage traders to build filters for their favorite setups that may come from the trades above. Traders have tools to measure how successful they are at each of these setups through the SMB Performance Center powered by Tradervue.
If you find that Opening Drives plays make you nervous and uncomfortable but Trend Trend Trades don’t then this is very valuable information. The former are very fast trades and the later more calm and slow. If your stats scream that Pullback Trades are where you are making the most money then this is significant. It may be that you are trading Opening Drive plays incorrectly and that is breeding the discomfort and negative PnL. Mentoring is an important process to help you find the setups best for your personality. A process like archiving PlayBook trades is vital to internalization and better performance of your favorite setups. At the start, this is the worst you will ever be as a trader. So give each of these trades some time as you are just learning to trade and building skill.
In short, we ask traders to build a PlayBook. They are exposed to all of these different trades and focus on the ones that feel right to them and our statistically profitable. Exposure, experience, mentorship, statistical measurement, review and process help traders find the setups where they have edge.
You can be better tomorrow than you are today!
Mike Bellafiore is the Co-Founder of SMB Capital and SMBU, which provides trading education in stocks, options, forex and futures. Bella is the author of One Good Trade and The PlayBook.
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