In this video, we share how elite traders are eclipsing their PnL records in this volatile market. Watch as we share one of the most profitable trading setups of the past month on our desk in step by step detail so you can grow your trading account.
View Video Transcriptin this video we share how elite traders
are eclipsing their P&L records in this
volatile market hi I’m Mike bellafiore
co-founder of SMB Capital a private Airy
trading firm located in midtown
Manhattan and I’m also the auto trading
classic one good trade and the playbook
watch as we share one of the most
profitable trading setups of the past
month on our desk and step-by-step
detail so you can grow your trading
account
[Music]
all right so this was a trade I made the
other day and I know I was taking the
back side of it not also had a breaking
news event that came in to help assist
the backside so the idea of a backside
is that stock is near vertical on the
daily and on this day this was the first
day that we had an opening drive lower
stock was getting below vo op holding
below vwap and then began to roll over
was thereby showing weakness which was
not seen in Prior days
price ended up rebidding about few up
but was unable to move meaningfully away
from price which therefore confirmed the
short thesis and that ended up putting
in a lower high to short against for
trade to hold for a longer intraday or
potentially multi-day move just like a
general note just risked 10% of your
daily stop her a lot on that you bed
okay
why did I ask for all of you to review
this play so a couple of days ago we
said hey who traded this do a play book
trade send it to me why did I say that
there’s a lot of opportunity in this
trade I was pretty generally pretty
clean um compared to some of the other
setups similar to this hundred sent two
reasons so one dr. Steinberg I wrote a
blog post today talking about how people
get better people get better by building
from their strengths it’s been some time
in your weaknesses but you get better
building on their strengths you don’t
beat yourself up the things you’re not
good at none of us in this room can play
in the NBA we spent all of our time
beating ourselves up about the fact that
we can’t play in the NBA that’d be a
complete waste of time
alright we also you know we’re not
global macro traders we beat ourselves
up over how bad we are being global
macro traders would be a complete waste
of time
we’re price action traders there’s some
guys in here really damn good at it and
you know just to take a half a step back
last month was the best month of the
desk in New York has had today one of
the traders made about 1.4 million one
of the traders had their first million
dollar month lots of guys had personal
bests I think dr. Schneeberger talked
about this as well and has lots of month
reviews in all the month reviews
talking about how to get better ten days
into this month we’ve done better this
month than a record month last month we
didn’t sit around you know all the guys
who had record personal bests or
thinking about how to get better we
didn’t sit around talking about all the
things they did poorly we sat around and
said how can we get better one of your
colleagues today was in Boeing on the
short side think you know who it is I
won’t mention any names they’re probably
listening I really won’t mention any
names and the person wanted to make more
money and was like man I just a great
opportunity I should have made more and
so one look one of the things you cannot
do an opportunity like this and say well
how do I make as much as shark did or
swagged in an opportunity like this this
was one of the best trades that we’ve
had over the last six weeks this is what
hands down one of the best rates one of
the top P&L trades over the last six
weeks and and and you know another
reason why were going over this and so
you know the traders sort of asks hey
Boeing is a really good opportunity you
know how can I make more unique you’re
not gonna be Sharky not gonna be swaying
right away but what you can do and what
I did say this trader is well how can
you be ten percent better in this idea
specifically based on your trading
system where could you have shorted more
in this case staying within your
guardrails where would you have executed
specifically where would have your stop
been specifically what’s the PlayBook
trade in your playbook specifically
where was the see at moment specifically
where was the seeit moment specifically
okay and how we’re putting together a
good trade thesis plus playbook and
you’re set up let’s see it did you get
in at a good price where would you have
to get in what price fight for price
that’s a good trade
okay thesis plus playbook set up in your
PlayBook Plus see it
let’s fight for price equals a good Trey
you got to go back and say hey here’s
where all those think here was the
playbook here’s the name of the playbook
trade in my playbook that it was here
was my thesis which are talking about
with your trade idea here was the seeit
moment here’s where I should have gotten
in and based on my experience right now
at this point in my career which in a
year you’re gonna be a lot better next
time you see a trade like this you want
to be better and it’s can be very
frustrating perhaps just to say you know
I should have made $200,000 in that
trade or you know one of the traders
made an enormous amount but you can make
you can make 10% more next time you 100%
that trader could have made 10% more I’m
going that’s a realistic goal that’s a
good exercise to go through all right
what do we got with this particular
trade 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 should be appearing right now at
the top right hand corner of your screen
that’s gonna open up this free
registration 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 then from years of online
education so looking at the big picture
you’re coming into this day there was
increased skepticism around the way the
virus is being handled in the US with
getting tests gets out and getting test
results coming in also on this day crude
was down about 20% from the open as a
result of an oil issue the market also
went limit down for the first time
within the first few minutes of the open
which was something extraordinary to be
able to sit through an experience so in
terms of intraday fundamentals the stock
has been behaving like a low flow even
though it isn’t with regard to the range
and how it just trades after coming out
last week they stated that they were
developing the Krone of X
which would be in clinical trials in
March they also had breaking news later
on in the day when citron came out and
stated that the SEC should immediately
halt this stock and investigate the
ludicrous and dangerous claims that that
they designed a vaccine at three hours
this was a serial stock promotion for
years this this will trade back down to
two dollars and this have been warned
I was also noted that in doing a little
bit of back on a research that his
company has a produced a viable drug in
decades and then the company also
announced it at the market offering of
fifty million dollars which could help
act as downward pressure on the name and
then a TRS a dollar thirty one average
volumes over 17 million the are well in
the state was significantly elevated at
almost nine a short float with the
sources that I have I was finding the
short flow to be anywhere between 13 and
30 percent the flow to the stock is 97
million the institutional ownership is
really low at 44 percent and on this day
it was gapping up more than thirty
percent two things in sharks daily
report card he got real excited to trade
this particular opportunity because he
noted there was an ATM before the open
and started to work into positions that
obviously worked second point is citron
for stocks that are not tier 1 stocks
you know or are up on spurious reasons
is really good
that’s a sweet spot this is the type of
stock that citrons sweet spot this is
the type of stock where he is going to
move the stock the most and you have to
notice the patterns with his tweets that
moved the stocks the most this is one of
them but he’s not good at yet he’s not
good at Tesla a real Tier one company
that lots of institutional investors are
in I think we all remember a sharp
decline after one of his tweets and then
the people who shorted at their faces
ripped off he’s not good at chop another
for now pretty legitimate company though
he sees things differently
so he’s that good in those tier 1 bigger
companies but he’s really good he’s
really good and you should recognize the
pattern he’s really good on some of
these lesser names so those are just
looking at the daily chart as you can
see has been pretty sideways but as of
recently in the past like a couple of
months we’ve been curling up and as
recently as the past like a couple weeks
we’ve been getting nearly vertical in
the name uhm this red day is the day
that we’ll be looking at well it’s just
looking at five-day as you can see we
made a move into the close on one of the
days when they made the news
announcement digested it for the day and
started at a vertical climb the two days
leading up to this one day this is just
looking at the 5 minute and the 1 minute
so for this particular trade longer-term
overextended correct which was one of
the things that we look for for this
particular setup so in terms of reason
cell or in this case like reasons to
cover the idea is that once momentum is
seen to the downside in this particular
case you get a lower high unable to move
away from price once a bug for you up
and you see volume come in to the
downside price gets black below view up
the stock should be able to trend lower
therefore my reason is cover should be
when the stock stops trending lower this
was a particularly in Stinson when I had
to use my limit down rules so for the
first limit down I’ll usually cover a
quarter of my position ready the first
print just goes it can be a pretty
erratic time and then I’ll evaluate to
see and over the next few seconds if
there’s gonna be continued selling or
there’s going to be buying and if
there’s significant buying then get flat
and reevaluate if it goes limit down
twice I’ll be able to I’ll take more
size off I’ll cover half of my position
on the first print and that’ll look to
trade looked as reevaluate to see if
they’re buying it back up and if they
are then get flat it and reevaluate
another thing I’ll use is I’ll watch how
far something gets away from view op
which is something that I’ve been
flirting with to see if stocks get
overextended
either to the upside or the downside and
I’m also working on figuring out how I
can use this for profit taking so in
this particular case will actually
double bottom with regard to how far
away something gets from vo op which can
be an indication of potential value
buying if it gets extended to the down
or if it gets extended to the upside
might be an indication of profit taking
and then obviously if the trend breaks
that would also be a reason to cover
some of the position good Alex good
rules rules rules good good example
right here are some excellent exit rules
so in terms of trade management you can
see right here on the open we get an
opening drive lower dr. s pattern where
we get increased volume so we know that
institutions are selling this name which
is uncharacteristic of prior days it
does rebid gets back under view up but
it’s unable to rebid above i starts to
form a little bit of a wedge and breaks
down from the wedge on increased volume
goes limit down and then right after the
limit down come opens back up you can
see that it’s still buying but we know
that from the open we see that
institutions are selling this one of the
places that I was looking at was once
price got back above v WAP I wanted to
see how it reacted and to see if they
could move away from price or if it
couldn’t and if it couldn’t that would
be a signal for me to start at a short
position so you can see that we get back
above V WAP here and we failed to move
away from price like we didn’t continue
higher and this is showing a lack of
strength so this was the first place
that I ended up shorting just risking
this wick high I thinking that if we do
get back below V walk we should begin
trending lower and then at 10:38 the
citron news comes out and we see that
the stock breaks below view up on
elevated volume this would be a place to
short tear to risking back above the WAP
before these backside ideas V WAP is
typically my line in the sand once the
stock breaks below V WAP on elevated
volume I don’t want to see it get back
above or at least get back above and
move away from price so that’s for tier
two then we can see after the move gets
digest for a couple of minutes we start
to consolidate near the low this base
that it’s been forming when you see it
start to consolidate below or like near
the low of that base and not really
bouncing that should be a place where
you add on additional size so you could
short tier 3 again risking view up
anticipating a continuation to the
downside once we break below this base
here and something that I’ve been trying
to work on is trading around the core
and scoping around a core so one of the
places that if I
go back and review this trade one of the
places that I could have added more size
was on the break when you get this
increase in volume for a momentum skill
and you can just use a simple move earn
exponential moving average as a place to
risk against good and just what price
would you have gotten in what did you
see on the tape that would have got you
in and what you would your stops have
been for those additive tears so we can
see once volume does come in and the
bids are skipping prices lower the stock
goes limit down for the first time right
here I’m okay holding a position through
the limit downs because I see that it
has been generally cleaned to the
downside so I know that on the first
print out of the hole I will cover half
or a quarter in my position because this
is the first limit down and reevaluate
and so since we don’t see any real
meaningful binding there’s no reason to
cover the rest and there’s the potential
for the stock to continue trending down
and then we end up going limit down
again once I come out of that hole
covered half immediately on the first
print and then since you do see volume
come in and and you do see buyers
stepping in this would be a reason to
cover for me this was a reason to cover
the rest of my position and reevaluate
when the price gets higher just because
I don’t know if maybe this is a place
for institutions to maybe start buying
this up if they want this so and then
this was also one place where I think I
could have done a better job was looking
for a reentry even though I already had
one solid trade in the books so I do see
that buyers do start to accumulate it
higher but they really aren’t able to
get it back above this 13 dollar area
gives us an indication that sellers are
still in control despite the significant
fall and despite the buyers coming in
after the second limit down you can also
note the decreasing volume on the move
higher after the second limit down which
doesn’t inspire a lot of confidence for
possibly taking any long setups so once
you see that we’re back below 13 we’re
back below the 21 and we’re starting
starting to consolidate again this would
be a place that I should have been able
to put more size on anticipating the
continuation to the downside I think
here your risk is really well controlled
I think you could have read
like the wick high from the retracement
anticipating a continuation to the
downside good I see that with elite
traders after it has the big move and
the momentum is now to the downside they
short the pops they look for
opportunities to short the pops I mean
this is really the early stages of
rolling over and as we know this ended
up rolling over for a couple more days
and one much lower and so when you have
that big first move down and make your
first big chops it tends to pop back up
and give you opportunities to catch some
other leaking lower over the next couple
of days
opportunities to short and really add to
your profits so good good good to look
for that and then again just going with
the concept of shorting the pops given
that we have seen that momentum is still
to the downside after going limit down
twice um look you can look to shortest
another pop risking the previous higher
low or lower high sorry it still shows
you that buyers are still not in the
name they still don’t want that they
still don’t want to try to prop price up
and you should look for a continuation
to the downside and so one of my exit
rules I’ve been developing is I created
an indicator that’ll show me how far
something is away from V wop which can
act as like an indication for
potentially value buy and if something’s
overextended so when I see that we’re
getting down about the same like almost
480 hours away from V off this is a
place for me to personally cover covered
about half of my position and reevaluate
see if buyers step back in and then if
we zoom out to the higher time frame we
do see that sellers aren’t able to push
price any lower so we do end up forming
a higher low and so in names like this
in any trade really you want to be
covering if you’re short you want to be
covering into weakness so you really
want to be covering into a higher low
instead of trying to cover
a higher and a higher high just as a way
to maximize profits now it’s your turn
what trade brought you the biggest
profits in this volatile market let us
know by leaving a comment below right
now
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