Teaching a prop trader secrets on technical analysis (that you will not find anywhere else)

In this video, watch Mike Bellafiore teach a prop trader secrets on technical analysis, that you will not find anywhere else. Mike works one-on-one with a trader teaching him technical analysis secrets to make a winning technical trade. Let’s get to work on sharing these important trading lessons so you can grow your trading account.

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in this video watch me teach a prop

trader secrets

on technical analysis that you will not

find anywhere else

hi i’m mike bellafiore co-founder of smb

capital and we’re a proprietary trading

firm located in midtown manhattan

and i’m also the author of the trading

classic one good trade and the playbook

in this video i work one-on-one with the

trader teaching him

technical analysis secrets to make a

winning

technical trade let’s get to work on

sharing these important

trading lessons so you can grow your

trading account

[Music]

okay so this is a flag break across

multiple time frames that’s setting up

on the 1

5 15 minute there’s a daily flag that’s

taking place

it’s in a hot sector and the goal is to

be swinging half of this

it’s on nio in the ev sector and this is

taking place on 8 24

2020 to 8 26 2020

so game planning there are two positions

to take on this

and the first is taking the day one flag

that we will go over

that is a 1 5 15 minute multiple time

frame flag

that’s holding up holding above key

daily resistance that has now become

support at 1460 and the goal for this is

as soon as it begins to work because we

have that bigger idea in mind

is to send half of it to the swing

account and use the other half on the

day

to create some cash flow behind it so

this multiple time frame flag

is actually an a plus set up for me

but the swing portion of it is something

that i’m working into my playbook

it’s common on our desk for traders to

have a day trading account

and also a swing account and what’s

helpful to a lot of the traders is them

for them to day trade in their day

trading account

and then take their swing trades and put

them in another account

so they’re not watching tick by tick

like they are for their day trading

account

and they’re trading that swing trade

differently uniquely with its own set of

entries and exits and variables

and also easier for them to

keep stats in this separate account

for their swing trades and it could be

entirely possible that you’re

really good at day trading but not so

good at swing trading it can be entirely

probable that maybe you’re not a good

day trader but you’re really good in

your swing trading

maybe it’s the case that for a lot of

guys you’re you’re good at both

and your day trades are really setting

awesome opportunities for swing trades

that you want to capitalize on

the second position comes on day two and

it is also that same

one five 15-minute multiple time frame

flag that

is an a-plus setup for me and again the

only difference between this day two

setup

is that it’s taking place right at the

open and again this is something i’m

developing

into my playbook i’m one who

in the past has sit out typically the

first 15 to 30 minutes

but if there’s these bigger ideas in

mind where you might never get those

prices again

and you’re playing for that you know

bigger idea

sometimes if that setup comes around you

have no other option but to take it

right at the open

so that’s kind of what i’m working on

right now it might only happen for me

you know a few times per month but still

something really good to have in your

arsenal and

again we still have half in our swing

account and we do the same thing with

this position

we send half of this into our swing

account and use the other half on the

day

to create some cash flow so basically

they’re the same setup with the same

idea in mind

and you know sticking half of it into

your swing account

and we have some really good prices vix

you know the volatility index the

opening print was 22

and if this wasn’t more of a sector play

evie it is

um with a big daily breakout volatility

being

being relatively low compared to prior

months is something to really take note

um this month i have been quicker to

take off some risk at the first turn

i see because of volatility being a

little bit lower and you know moves not

showing continuation all the time but

again this is a very hot sector

it’s a big daily breakout there’s a lot

of volume behind it

so it’s a little bit different yeah but

kyle

22 vix is still higher than

it’s been for most of the last six years

you know we were between

12 and 15 for most of the last five

years so

while volatility is 22 which is a little

bit lower than it has been of late

overall it’s still pretty high yeah

correct

relative to the last couple months we’re

not getting those

big time moves all the time maybe

there’s less opportunity or less

you know positions that we’re getting

those moves but still volatility

over the last few years we really can’t

complain about it

yeah and i love you putting in what

volatility was

in your playbook that’s an excellent

addition

and i like how you’re pointing out that

this is in a really really hot sector

which may override what volatility is

overall for our reading so

vixx could be 17

it could be 15 but because this is in a

really hot sector

the ev space we could still have

lots of movement more movement volatile

movements

could still follow through better

than a large cap stock and the reason

why we’re

putting volatility in at the beginning

of this particular trade

is to see how we’re doing when

volatility

is at certain levels when volatility is

between 12 and 15

trading is going to be different than

when volatility is

25 and above correct and because of that

um i think it’s important to know where

the leader is in the ev

sector and of course that is tesla um so

it’s important to have it on your radar

make sure you have it pulled up um when

some of these other ev names are

you know in place so it can be whatever

sector whatever the head of the snake is

you want to be keeping an eye on it

because in this case i would say

keeping an eye on tesla is almost more

important than you know

maybe what the overall market is doing

it’s good to have you know a good

reading of both though

completely agree in a hot sector what’s

the leading stock how’s the leading

stock doing

that’s going to be more important than

how the overall market is doing

excellent point you’re making and then

on day two

it pushed at the open this is tesla and

that may have helped

nio break out right at the open as well

kind of fuel that fire

and all that is is simply more

confirmation 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 going to open up this free

registration page in the new window

so don’t worry you’re not going to lose

this video you’re going to learn more

in a couple of hours from this trading

workshop than from

years of online education so the

fundamentals nio limited

um they design and develop high

performance electric vehicles

has been leading the pack in eevee

breaking out to new all-time highs and

has a split coming up at the end of the

month

very soon the next couple days um eevee

names are

certainly in play there’s a technical

setup

um it’s a daily flag it’s you know a

setup that i’m very comfortable with

and there’s eager people who miss tesla

looking for alternatives you know people

who really didn’t capture the meat of

the move on tesla they’re looking at

some of these alternatives

and we’re going to go over at the end

how to kind of scan for those or screen

for those at night

so it’s in a hot sector there’s a

technical breakout across multiple

multiple time frames high institutional

ownership

relatively high short flow and you know

that can

equal fuel to the fire it doesn’t always

need to be

you know a simple independent news

catalyst and we really didn’t

from what i came across we really didn’t

have that on

nioh what you mean by that is that

there can be a technical breakout that

is the catalyst

or or there can be a news catalyst

in of itself that can be the catalyst it

doesn’t always have to be the news

catalyst

for something to be super in play it can

just be that there’s a lot of buying

that’s come in

our bowl is high volume is

is high stock is

is acting well intraday

it’s holding above you up nicely it’s

holding

its time frames really really solidly

and that can get you to be interested in

a particular stock

um so some statistics on nio the daily

volume is typically around 123 million

areval this is current volume at the

time compared to its past

at the time of the reading it was 3.14

at the time of the positions

these flag breaks it was a lot higher

than that i wasn’t able to capture it

but it was five plus

for sure um atr 0.98

this is kind of how far we can maybe

expect a stock to go

but if of course if the arvol is

elevated you know over one

we might get multiple atrs short float

12 relatively high it’s been growing so

you know we have some shorts who

are underwater um the float is 838

million it’s not a low float stock this

is something that you know you might be

able to

feel pretty comfortable if you get some

good prices holding this overnight

institutional ownership this is

important to note it’s relatively high

at 45 percent

and what this tells me is a lot of these

institutions from my understanding they

play on bigger time frames

bigger time horizons so if you see

something maybe like a one minute flag

taking place

but if you zoom out to you know the five

minute the 15 minute the hourly

and the daily maybe and it doesn’t look

so hot it’s very overextended you want

to be really careful

at least from my experience to not

really run after those

you know one minute breakouts and it’s

that’s all it really provides me with

you know there’s big money involved in

this

and they might be looking at some bigger

time frames than the typical person

okay so we get into the daily and this

is something i’ve been stocking for the

last couple weeks it’s a very nice setup

of course in a very hot sector and we

have about a month of consolidation

we are building some higher lows but on

relatively lower volume

and we’re getting ready for something

special it’s built up

we have longs and shorts duking it out

and that’s kind of what consolidation is

all about

we have you know we have bulls and we

have bears fighting it out

and one side is going to win it’s either

going to be a breakout or a breakdown

and that’s kind of the timing point

that’s where you know

things get pretty exciting and we could

kind of see that we have this high

volume day

on this breakdown down below i show it

with shorts thinking

hey maybe this is the top they’re

getting involved and they’re risking off

this high

you know there’s a good possibility some

bigger time frame players maybe took

this breakdown

and they’re risking off this high so

you know if we consolidate build some

higher lows and then break over that

level

well a lot of them are going to be

cutting you know they’re going to be

forced to pay up we’re going to have a

lot of longs looking at this getting

involved as well we see an increase in

volume starting to come in when we do

build some higher lows and when we break

out

and when we get above 1469

the day prior this level right here and

hold up the 9 ema that green line

is creeping underneath showing this is

not as extended as you know maybe some

people think and again there’s a high

institutional ownership behind it

and i use a 90ma as a reference point

across multiple time frames to determine

whether or not something needs to first

reset itself

and i also like that the previous day

low at 1362

right here and right here is only about

a dollar

away so many bigger time frame players

will risk off this you know the previous

day low and because it is so close

the risk to reward makes sense for them

to participate so there’s going to be

more market participants

when this does break out that’ll bring

in more volume

more people are looking at it that’s all

it is

but it is important good wedge pattern

on the daily chart

it does a nice job holding over the nine

ema which you’re looking at you know it

gives you

a gives you a really tight

area that you can see who the winners

or who the losers are for this

particular

the trade and the other thing i like is

that what’s the ema doing

it’s heading higher yeah it’s sloping up

yeah that’s a bull sign okay so this is

the five minute and the 15 minute

on day one of this breakout we’re gonna

see that there’s kind of that opening

push

again for the most part i’m sitting out

that especially when it’s not very clear

it breaks out you know you could get

some type of momentum play in there

that’s not really me

it’s pretty hard to fight for price

there we pull back in

and i know quite quite a few people who

are buying these dips

one thing that strikes me as

should be next or should have come

before

and maybe you’re going to talk about a

little bit later is

a chart of how tesla has done

recently you know so we’re saying

the tesla’s been really strong

it’s been it’s been super strong we’ve

said

we’ve said hey there’s been this this

kind of weird catalyst

of the stock is going to split tesla’s

going to split it’s going to split

august 31st and it’s run up

a bunch since they announced that it

hasn’t just been strong and hasn’t just

run

up i mean it’s it’s vertical it’s

it’s i don’t want to say it’s parabolic

but it’s near parabolic i mean it’s

it’s been unusually strong unusually

steep to the upside

and to get a picture of that next to neo

strikes me as i love your logic which is

the people that miss tesla may seek

second and third tier stocks to

add exposure to the ev sector

perfect sense spot on 100 correct

great thinking and so

to have that picture of how much tesla

has run

up and for you to include that on your

playbook

places in your mind when that does break

out

when it’s holding up on the 1-5 the 15

the 30-minute charts

whatever it is that you use for multiple

time frames and here you’re using the

one the 5 the 15.

other people may expand that to the 30

maybe to the 60 minute there’s no right

answer to that it’s

that’s a personal preference that’s

going to make me

way more way more optimistic

that if i see something holding up the

one the five the 15

then i ought to buy it and it’s going to

work because of what

because of how how well tesla traded

because of how steep it is

and to be specific about what that

picture looks like

does that make sense yeah i’ll

definitely add that down the road and

the next idea that’s similar

okay so i’m taking the flag break at

1471 with risk off 1464.

and this is an a plus setup for me again

it’s that 1 5

15 minute it’s a little bit extended on

the hourly and that is something i’m

looking at as well

but this is a pretty good setup for me

this is an a quality setup and it’s also

above key daily resistance at 1460.

it was kind of that line in the sand we

could kind of see we broke down from

there earlier

we got back above you know quite a few

people are underwater

and that you know that daily resistance

has now become new support and it’s

holding quite nicely

so nice tight risk that we’re able to

take on this and you know i’m fine with

hitting out of this

if it doesn’t want to work out right

there maybe it works out later

but you can see that the goal is to sell

one-third

of half of my position on the first turn

um that’s something again i’ve been

doing a lot this month i’ve been

pretty aggressive with taking profits

and

you know it’s helped out this month to

say the least

and the other half of this position is

going into that swing account

with that bigger idea in mind again it’s

in a hot sector

tesla is squeezing the living daylight

out of everyone short the splits coming

it’s breaking out on the daily you know

this is a really nice setup and it’s

holding up into the close

so throw half into that swing account um

and we could bring down that risk to

1460 because it is that key level

um that’s taking place on the daily

so then sell the last two thirds prior

to 350 when this breakout stops

um again holding the other half in my

swing account with risk off

1459. so kind of right before that

or right before that market imbalance i

think it was a selling balance on the

day

maybe you know just get out of the

position it has this breakout it’s not

really showing continuation

and again we’re still holding half in

that swing account

um so you know get out of the remainder

position that we’re holding

so then day two comes around and this is

the setup that i’m kind of working into

my playbook because of the time of day

it happens at

so take the flag break at 15 17. it was

something i was taking a look at but i

kind of

sat it out with risk off 1502

throw half into the swing account once

it opens up again we have

really good prices so we have half from

yesterday and now half from today

in that swing account from some really

good prices and there’s a good

possibility that we’ll never

you know in the next few days or at

least on this day we won’t see those

prices again

um so the half that i’m using on the day

i want to be piecing out on every reason

to sell

um usually i’m selling a third or a

quarter

and now i have half from yesterday and a

half from today in that swing account

with around a 1493 cost basis

um some really good prices this is where

you know

some some may argue that this is not the

right move and you know everybody has a

different time horizon and this is

something i’m working on

um but i think when we break down from

this five minute low we put in a lower

high and we’re starting to get heavy

um and some volume comes in to sell half

of the swing position on this

consolidation break

and the rest of this ring position is

with risk off 1640

um this kind of low right here

and this is a big two-point move it’s

two atrs i think the atr like i said was

98 cents

so this is basically a two atr move or

and again we had some nice size on it

because

you know we got some really good prices

we fought for price and

you know we weren’t risking a whole lot

so this is a relatively big move and

there’s nothing wrong

with locking in some maybe i don’t have

to lock in a half but you know that’s

something i’m gonna

work the kinks out of down the road and

then this is day three

and we could kind of see we’re forming

higher lows here from i think

from day two and then in pre-market

hours we kind of retest that level we

retest it at the open

and then we kind of get above 20 and you

know that is a big

important level it’s a whole dollar and

we kind of have this big slam

down and then you could kind of think

okay we get this big slam down but we

kind of hold up so

you know maybe this gets a lot of shorts

involved and maybe we could reclaim an

after hours and break out

but instead we break down and

so and the the goal is to sell all of

this when we break these higher lows

it’s basically a five-point move i

captured on relatively nice size

due to you know pretty tight stops the

first position had a seven

cent risk um when getting involved and

risking seven cents initially to capture

five points

on a good portion of the position is you

know nothing to complain about

so these are the variables of this setup

it’s in a hot sector you really couldn’t

ask for a better one right now

the ev sector tesla not only at all-time

highs

not only does it have that split coming

up at the end of the month but it

it’s squeezing out everyone and a lot of

people miss the move on the long side

um so we’re in you know one of the best

sectors with one of the best

you know leaders in the space right now

are of all greater than three it had

that daily flag breakout

it also had flags throughout the day um

and that’s something i’m very

comfortable with

um there’s a playbook set up on day one

and i’m working on day two with this

playbook

plenty of liquidity tight one one cent

spread

um i think this is kind of a quote from

one of your books bella

where somebody talks about there are

those spots where you know if you want

to buy unlimited

um this is you know one of those names

where you could almost buy unlimited you

know

insane volume you know good story behind

setting up on the daily setting up on

the day you know you can get in and out

exactly where you want on this name

volume moves in at both timing points

confirming thesis

there’s a clear level where i’m wrong

and that’s really important for

my style i need to know exactly where

i’m wrong and

if i want to put a hard stop there i can

put a hard stop and i can move out of

the way and then reset

and on both of these positions it had

exactly that

there’s a clear level this is also

important to the thesis and the context

behind it of where early longs have

stopped out

you know where maybe some people from

the retail point of view or you know

even other people as well

maybe ran after the name and then you

know bought it a little bit too high and

then it pulled back in they had to stop

out so there’s less overhead from

those longs and then also knowing where

shorts are stuck

across multiple time frames and where

they are risking it and where they are

risking

is that timing point where i want to be

getting involved because

you should see immediate resolution and

you should see it you know push away

from that price rather quickly

and that’ll keep you know your mae

pretty low so you know if you go in

risking

on one of these flag breaks and it works

right away you really shouldn’t go down

on the name a whole lot if any and that

is important to my style

yeah and i’ll just share that one of the

traders

you talked about liquidity that there

being plenty of liquidity

one of the traders at the firm was

long more than 300 000 shares just to

sort of use a number

uh and just to give you something to

think about yeah now i want to go back

if we can go back to your intraday

charts

a couple of things you want to have

so you’re saying basically this is

holding up on the one the five the 15

minute that’s my trade

yeah i need to see charts where the one

minute is holding up

where the five minute is holding up

where the 15 minute is holding up

and for you to be showing me where

you’re going to be entering

because the one the five and the 15

minute charts are holding up

yeah that makes sense and it makes sense

for your learning because

there’s a large difference between you

going through this exercise

and having done that work the one minute

held up this is what it looks like

the five minute held up this is what it

looks like

the 15 minute held up this is what it

looks like

and you put that together you go over it

you go over it again you’re visualizing

in your head

what you want to see for a one to five a

15 minute

flag hold next time you see that

particular

setup it’s going to be so much easier

for you

because you have that picture in your

head yeah of the one the five the 15

minute

all aligning uh as opposed to here which

is you

you don’t have that so that’s number one

the second thing is

for this particular trade particularly

two-day three-day trades

you need to have a chart that overlays

how neo is trading in conjunction with

tesla

is there something that you can learn

based on how neo should trade

based on the way tesla was trading

when tesla pulls in what does neo do

when tesla makes a new high what does

neo do

is there a lag between a new high and

tesla

and what neil will do are there clues to

how tesla’s trading

okay the head of the snake as you said

the leader

that can help you trade neo so you need

to overlay a chart

of that in here because you’re going to

see that kyle you’re going to see

certain commonalities between when there

something that’s real hot when there is

that head of the snake that’s real hot

and then the second tier and third tier

starks stocks

start to go and

you’ll you’ll be able to

[Music]

add some some risk pretty easily

just based on what you’ve observed

as to how tesla trades first and then

how neil reacts

there’ll be some real easy money i mean

you’re talking it’ll be some real easy

money along the way some scalp some ads

that will will make this trade a good 20

more profitable just by doing that

yeah and i actually saw quite a few

people at the firm um

they were talking about how they were

buying these dips on nio

and you know maybe part of that is

because they were keeping maybe a little

bit of a closer eye on tesla

and you know seeing that it was holding

up and breaking out

so that is definitely something i need

to add to this playbook

okay so we’re on reading the tape and i

don’t have the tape on this i was in a

few other positions at the time

um but it’s kind of like any other flag

break

um maybe a little bit more powerful on

both setups that are working

shorts are being forced to cover at the

timing point on that lower high break of

every flag

and long’s paying up and that brings in

volume from both sides and

these flag breaks i’ve taken for the

last few years and

you know i it’s pretty clear what you

want to see you want to see that

breakout on big volume

and you want to see it get away from

that price really quickly and that is

kind of confirming that idea

um and on every single pull in you kind

of want them to be higher you know

building those higher lows and you know

they could be

slow they could be fast but they should

be on lower volume

um after breaking out followed by buyers

coming back in

you know every single breakout so on

every pull-in if there’s a lot of

you ever thought about building

something visual for yourself

to determine how strong the tape is

so all right i’m watching four or five

things at the same time i can’t watch

neo

tick for tick can i use my technology

skills

to give myself a visual map of

when this the tape is a lot stronger you

know for example we’ve talked about this

in the past

you can build a filter and it can tell

you the percentage of volume that’s done

on the offer

percentage of iron that’s done in the

bid and you know if the percentage of

volume that is done much more on the

offer does that give you an edge

uh and and that’s just that’s a that’s

an idea

for you but you should you should think

about using your technology skills

to grade how strong the tape is

overall and i would say on these you do

want to see that offer

a lot heavier than the bid on the

breakout so that is something

that i should you know add to a filter

or my tape

so that’s something i could certainly

add this week

and work on so how could i’ve done a

little bit better on this or i guess a

lot better

continue to playbook this setup until i

have a big enough sample size to

start taking it with a sense of comfort

personally

i don’t like executing positions until i

have a playbook backing the setup

now the day one is a setup that i should

have taken it is

a playbook setup for me um and

kind of a reference to this is i used to

play baseball and it’s almost like

hopping on the mound and in a big game

you all of a sudden

you know decide to throw a knuckleball

when it’s not in your arsenal

i don’t really like executing positions

that i don’t have in my playbook as of

yet so that’s kind of what this exercise

is about

and that is why i’m adding this and you

know getting more sample size

until i’m more comfortable with it and

then i can take it you know pretty small

until i feel more comfortable what

position did you play in baseball

that was a picture yeah you know it’s so

interesting so my son

who’s seven is taking personal

pitching lessons and personal hitting

lessons

and you know as you know i pitched in

college and so

i i you know that’s that was a big part

what i did when i was a when i was a kid

and

i love your point about hey we’re just

trying to get better i i

am just struck by

some of the things that i did not do

when i was a pitcher that luke is being

taught to do

right now at seven and i mean the other

day

i was i was watching the lesson is these

30-minute lessons one-on-one

and they start by going over the

mechanics of throwing

and you and i will talk about this in

person because this is so insider

baseball

but there’s there’s literally something

that i did not do when i was a kid that

when i watch

lutz luke’s instructor teach him how to

get in a starting position for pitching

that i just literally can’t believe that

i never did

yeah i just can’t believe it and it

would have added

three miles an hour to my fastball if i

had done what luke is being taught to do

and so yeah i mean these things are

getting this stuff down is is super

important will make you a lot better

uh made me want to i literally i was

like i can’t believe i did not think of

that like

how could i possibly have left that out

so things like this really do matter

yeah i i totally agree with that

the last couple of years that i played

baseball in college i

you know started picking up things you

know i kind of started following bauer

on the reds or i guess he was on the

indians at the time

and he’s big into tech and you know

weighted balls and recording and

you know getting video and that is stuff

i wish i did a lot

earlier and now that you know i’m in the

market you know i’m kind of learning

from those mistakes kind of similar to

you

um with baseball you know wish we could

have done some of these things in the

past and you know now i’m able to

kind of bring that into the market and

work on that now 100 and i’d say that

too with my training

if i had my trainer when i was a kid

when i was playing that i have now i i

gotta

i gotta say i probably would have added

another

three four miles an hour maybe more uh

maybe three or four miles an hour and

and when i train with my trainer i’m

just like

i can’t believe that i didn’t know this

at the time

so anyway we’re always learning

definitely

um so to wrap this up i guess i have one

Mike Bellafiore Co-Founder, Managing Partner	Steve Spencer Co-Founder, Head Trader
Seth Freudberg Options Desk Manager	Jeff Holden Head of Recruiting
Justin Spero SMB Trader	Garrett Drinon SMB Trader
Ryan Hasson SMB Trader

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