Hi Mr. Bellafiore,
Terrific book, thank you for writing it. I have the audio version. I ordered it two minutes after I read a comment from one person saying that he had listened to it six times.
Due to my tape / chart reading ability combined with having read Reminiscences of a Stock Operator six times (and other books less so) I was very recently able to achieve a (solid) returns in 60 days through day and swing trading.
It was done without leverage or options, and primarily in swing trading stocks under $3.00 which had fallen 80-90%. I bought the positions at their support levels shortly before their going into bullish engulfing candle formations.
In general I gave a probability of that occurrence an 80% chance of happening, so I didn’t scale in. Interestingly it worked about 80% of the time. The shorts scrambled to cover, the bargain hunters piled on, it was all great fun, and when a climax top occurred, I sold.
However my questions to you are these: Jessie Livermore (as I currently do) traded alone and in silence. As you probably know, he did not even allow talking by his board men. Is there a way in which you control the noise factor in your trading room?
Secondly, Jessie considered his movement to “sitting” on a winning position to be the juncture at which he truly evolved in the game. I would imaging that as per risk control purposes that never happens within your firm on either the long or the short side, am I correct? I reference short MCP and long SRCL, and similar.
I don’t disagree with day trading whatsoever. If you look at the moves of KNDI today, PCYC yesterday and HLF the day before they all performed very well under said format. As you seem to concur with, “The best tip is observation” Jessie Livermore.
However could you please consider the above questions? I am very interested to hear your response.
@MikeBellafiore
1) Some traders should trade in solitude as noise can be very distracting to their trading. My sense is that these traders are in the very small minority. But if you notice outside noise as very distracting to you, then you might consider an environment change.
Personally, I want to hear ideas shared by others. I consider developing your auditory skills and what information can help you and from what traders important to performance. I encourage our traders to share call outs of stocks below or above important inflection points.
In fact, I was unhappy with the lack of call outs in $UA from our newer traders, took them into the training room, and corrected this behavior. We trade as a team. We cannot miss our best trading setups. And one safeguard (along with charts, alerts, SMB chat room, trading filers and preparation) is the sharing of excellent trading opportunities.
We have never trained a trader who asked to move to isolation. Perhaps if you are not willing to share or get distracted by call outs my desk is not the right environment. A great example today was in $LOCO. One of the younger traders called out this idea. I punched it up, liked how it looked, bought it at near 19.50, went to the bathroom, came back and sold it near 22. That one idea shared by another on our desk, made my day. And financed my $P short idea that I generated and absolutely didn’t work.
I want to hear trade ideas and then decide for myself whether they make sense to me. I want more trading opportunities presented to me and in the end will hold myself responsible for the decision to trade or pass on it.
If you have never sat on a professional desk, you will hear stocks call-outs, a squawk box, playful banter, cussing and frustration at time, the ever-so-often humorous and inappropriate comment (depending on the desk), and encouragement.
I must also note that the younger generation of traders is not as vocal as us old school type- Steve and me. We were taught (ordered is more like it) to call out trades. The younger trader today on comparatively prefers to receive information via chat. They grew up in the digital age. Heck e-mail was being invented at the start of my trading career. The young traders today just do not like to verbalize, call out trades. They prefer to chat about them, type them to each other, in a chat room.
Finally, I prefer social trading. I view myself as a point guard for others. So my bias for traders to share may be from my own personality and world view.
2) Holding your winning positions is very difficult. In The PlayBook, I offer Reasons2Sell as a way for traders to develop a system to hold their winning trades. I agree this is vital for trading excellence.
I hope that helps!
Related Posts:
From The PlayBook: Reasons2Sell
An Exit Strategy to Add to Your Trading (Reasons2Sell)
“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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