In this video, see how a firm prop trader is trading better than he thinks and why this is important to recognize. A SMB trader shares in step-by-step detail a multi-day trade in GameStop, with an additional lesson of the importance in giving yourself credit for what you are doing well.
View Video Transcriptin this video see how a firm prop trader
is trading better than he thinks
and why this is important to recognize
hi i’m mike bella fury 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 a firm prop trader shares
in step-by-step detail a multi-day trade
and gamestop
with an additional lesson of the
importance
in giving yourself credit for what you
are doing well
let’s get to work on sharing these
important trading lessons so you
can grow your trading account
today i’m going to be going over a
multi-day
backside pop play and this is going to
be in gme this works well in
quite a few names but this actually sets
up quite well in gme
on multiple occasions as i’m going to go
through in
a lot of these slides okay as far as
fundamentals
i think um over the past year we’ve all
learned quite a bit about gme
um given what’s what it’s done so
consumer cyclical
special realty company and they sell
games entertainment products
um through its online and in-person
stores all across the united states
canada australia and europe
and for this particular play this is
actually going to be they’re actually
going to have a catalyst
they announced in after hours the
previous day that they
had filled their atm offering program
that they had announced a couple weeks
prior
average daily volume 26 million
atr which is important in this is 19.9
almost 20.
54 share float which is quite small
given
the price of this this name quite a high
institutional ownership
as well as short float which is still
relatively high not as high as it once
was but
still kind of high given what kind of
name it is
good to make a note of what arvol was
good to make note of what the overall
vix was
for your playbooks yes i actually have
the vix
on a slide coming up which should be
like two slides
and i’ll talk about that in a second um
so spy
currently in a 30 day uptrend uh coming
back into its previous all-time highs
during this play which kind of has a
couple inside days
right at all-time highs creating a
really tight range
which is important to note just to keep
on side watch just if this does break
out and has an expansive move it can
water down some kind of outside place if
you’re looking
against kind of the overall trend of
what spy is doing
and then as bella mentioned vixx we have
seen a recent shift
in vix it’s a 30-day downtrend and it’s
coming off quite a bit
and after talking to a lot of traders
inside of our firm as well as dr s
has mentioned this multiple times is how
to kind of adjust
to lower vix markets or
just changing fix overall is really
trying to change
your overall time horizons and how
you’re managing trades
and this plays right into this so
recently we’ve seen
larger term moves work a little bit
better with kind of a wider stop and
looking for bigger picture moves instead
of such short
drastic moves with the lower vix which
we’re not going to going to get
as much so that plays a really important
part in this overall trade
and understanding how a lot of the
trades in the current market set are
working
so long term technicals obviously we had
this really large run up in gme
and then the secondary bounce which
ended up coming off
after that big flush day rolling over
and then a secondary bounce
after we got these earnings back into
this kind of 200 range
which is going to be this key level for
this play a really important note
that i was going to get into is these
multi-day backside pop plays
which as you can see anytime it gets
extended or
has an expensive expansive move to the
upside
such as this day this big move
after earnings you see that it kind of
trails off for at least the next day
or the next couple days like this
which is kind of what we’re going to be
seeing so we’re gonna see if we can get
kind of a repeat of history of
if this name is going to continue acting
the same as it does
whenever it pops back into overhead
resistance fading for the next couple
days or at least for this
current day which is what this trade
kind of takes advantage of
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than from years of online education it’s
a multi-day
this is what this expansive pop looks
like on the hourly chart
so we see we get like almost three atr
move from this low to this high
and it’s gapping right back into this
previous day
previous consolidation area which kind
of gives you a buffer
uh being able to play and so we can see
we take out these
two previous highs which kind of stops
out any longer term
shorts that we’re trying to take
advantage of these moves and kind of
resets the whole playing field
which is quite nice and makes it a
little bit easier to trade at times
and not as crowded it gives
some cleaner moves since we are
expanding out of the range the previous
day that we had
was extremely strong unable to break
down b-womp
uh on the open and this one held v-off
really well
curling up and closing upper quarter of
the
entire day’s range as i mentioned a
three atr move from the fire made low
and then this is whenever we get the
news after hours
of the atm getting filled which is
actually quite a big catalyst
given a lot of people tried to play this
to the short side whenever that catalyst
was announced
so them announcing that this gets filled
gives it an expansive push
after we had already run up two days
back into a previous range
and we set a pretty aggressive high um
early in the after hours
people might not understand this at home
why were they trying to short
after the announcement so the
announcement of the atm
which just adds shares to the float it’s
the company’s selling to
help them financially make it through
whatever hardships or whatever cost they
do have so they’re basically selling
into
the current market price and the atm is
you can sell it any current market price
that you do have
so it just adds supply to an already
overly supplied chart which in theory
would make it go down easier
so it should have went down but it
didn’t correct
and the shorts got run over at least for
the short
temporarily yeah and then them
announcing the
atm has been filled that kind of lifts
that extra supply out of the market
which is why i
kind of got that positive reaction
immediately back
in such an expensive move so pre-market
variables
we just touched on the atm news the 198
after hours high was set and it was sold
really hard
i don’t know if you can see this on this
chart sold really hard back
all the way back into these 180s range
um so that’s pretty aggressive high set
especially with how high we do come off
or how hard we do come off and then
we’re we opening flat a lot of times
you’ll see with
like gme or other kind of heavy catalyst
driven
events that do have a lot of shorts you
will see
a gap up the next 4 a.m open
which we didn’t see at this on this
occasion
and then in pre-market going into the
open we can see that it was never
touched
and so that kind of sets the tone at
that 198 high
is going to kind of be the inflection
point
for the day to see if we can either a
retest that or if it holds
that could be the high for the next
couple days if this is going to be
a multi-day selloff after this extended
push-up let’s just
narrow in on what the overall trade is
so if you go back to the
the variables what’s the trade
the trade is that after an extended push
on a multi-day
name or a multi-day push on a name such
as gme
it has the tendency to fade any over
extensions to the upside
once this once the top was set in it
so any extensions were have been faded
for multi multiple days or at least in
the
shorter term time frame okay so two
questions one how do you determine
over overextended and two are you using
the high as a technical level
so to answer your first question
overextended is going to be
any multiple days in a row where it’s
going to be having
extended pushes like this and then it
adds this
after hours catalyst which makes it even
more overextended
back into what’s really important is
into uh previous levels so
this 175 was a level and then also 190
to 200
we’re also overhead levels from the
earnings consolidation so is the trade
overextended on our daily charts
over extended on our shorter term charts
up against a longer term technical
resistance area
yes yeah i understand that
uh it might be helpful for you
to be very succinct about what about
what you’re doing and what the
what the trade really is i i did read
your variables and maybe that makes
sense
to you it strikes me as you can be more
succinct and
clearer about what the trade is yes i do
think i can be
more clear with like atr’s and like
marvel
and what um easily defines
over extension in each of the names so
for this
i really kind of wanted to see how a
push would look back into
to see if we could test this high that’s
going to be the inflection
for me um all the way up to 200 which is
kind of a hard level
to kind of size into this and then see
if we do get a rollover
and so off the open we get a small cell
on a little bit of volume and then we
get this expansive push
back into kind of these highs to see how
strong we really are
and that is immediately sold back under
v-womp
back out of this range into these lows
and consolidates hot
uh sideways and that basically shows me
that the
larger term demand is not going to be
able to sustain for this to push
all the way back into these highs and
continue to run and that this kind of
sets the tone
for the day that this was sold so hard
that it wasn’t able to
uh hold v-wamp like the previous days
and that it’s back under v-wop so
quickly and so hardly sold
really sets the tone for how this
possibly can
play out for the rest of the day after
this immediate selloff uh towards highs
price begins to consolidate sideways
you see we never really test above this
184 185 level
but i think the really key parts of this
entire day is the failed push higher
on multiple occasions we have this which
starts to trend
and then here we’re unable to test this
high and we end up breaking this up
trend
and kind of selling off but we continue
to go sideways
and then the most important one was this
one i do believe
because we once again made a new higher
high
and then got immediately sold back into
the range back
going sideways underneath v womp and it
clearly shows that buyers are unable to
push price any higher
than the current price and this stuff is
immediately sold
and consolidated and then we finally get
that larger term breakdown
on high volume to kind of roll down and
see if we can retest
these lows so bella that’s kind of what
this trade
is this kind of seeing if we are able to
push higher
and are strong for a continued day or
are we unable to push higher with failed
continuation and failed follow through
and eventually a large term breakdown
bigger picture from the daily
historically this
every time it’s pushed multiple days in
a row
since it’s been on its backside they
have been sold for multiple days in a
row and that’s kind of what we get here
this high is never retested and once we
get this breakdown we get a gap down the
following day
and a push down as well and then even
if i didn’t update this but yesterday it
was sold
back down even further with this high
never being taken out
so like i said with vix being lower
really
opening my playbook up to larger picture
trades with a wider stop has been
something that
does work and has been has been showing
a lot of promise lately rather than
getting such
momentum moves i was comfortable
scaling in very small this is extremely
tiny size
because i was giving it all the way to
200 just having
specific levels like 185 was the level
that i had
and then 188 and then all the way into
200
was kind of going to be an area that i
was going to be
anticipating coming up so whenever we
get
immediately flushed back into this 185 i
took this
off this was v wap it on this chart but
this is also
pretty close to v-wap as well so i took
this initial sell-off
to kind of rearrange my average if we
did want to hold and push and as soon as
we sell back off underneath that
back into this opening price i re-added
it back just started to add around a
core
expecting as long as we were under 185 i
wanted to see where the next lower high
was
to risk off of that and to start adding
against this 185
and then against this previous high
and so just kind of reworking my average
on these if i can just jump in right
here tristan so
what if i were to say to you take a look
at your comments and your comments focus
on you know what you did poorly what if
i were to ask you
to rewrite those comments and to focus
on
what you did well with your execution
what would your comments be as to what
you did well
i can definitely say the thing that i
did well on this was not to oversize and
keep the bigger picture
trade in mind um so front side i didn’t
oversize
at all i was really small and was able
to risk where i wanted to
and then also on these ads i was never
unable to
continue to risk more once the trade set
up
better and better and then even being
careful with
taking off half right here as we’re back
above
the shorter term high yeah i think
you’re leaving something out though
that’s pretty important that you did
well
what is that how do you feel about your
entry price
i thought it was really um really well
uh given the scale in and how well it
worked yeah it was a really it was a
really good entry price
and i point this out because i think
that’s more important
the takeaway from this trade for you
is that your entry point price was
really good
you didn’t oversize
and you kept the bigger picture in mind
that that’s more important that’s like
that’s the most important part in
reviewing this trade is for you to
understand what you really did
well so that you do that again and you
remind yourself
to do that again and then to a lesser
extent to a much lesser extent
you know i could have done better here
so your your thought process walking
away from this is
85 of your attention is these are the
things you did really well
let me do them again really well and
then you know like 15
i could have done a little bit better
here and a little bit better there yeah
i think that’s a much more constructive
and accurate way for you to be reviewing
this trade
uh rereading that i can definitely see
see that and um
whereas i did understand what i did well
but uh
not reviewing it i think it’s probably a
mistake yeah
it just strikes me as you’re being a
little bit too hard on yourself
so going forward ideal trade management
i think for the first part of the trade
everything
stays the same i did like i said size it
well
and just i need to be a little bit
bigger since i am getting more and more
comfortable with
widening my time horizons on this
and then the only adjustment that i
would make would be whenever we are
coming into lowe’s
understanding what kind of trade i am
looking for and not taking
as much off into this flush and really
looking for a breakdown of this 178
in the these lows right here and
possibly adding a momentum lot
for the breakdown since i did have such
a good
average price at the time given we just
broke down
on elevated volume the trade summary is
this consider continually sets up every
few days
and especially on gme it does really
well
given how well of a range gme does have
whenever it does set up
and this isn’t just a trade that sets up
only on gme
this sets up on many multi multiple
sector runs
small caps anything and so continuing to
review these trades is going to be
something that i focus on
as it can make a lot of large part of my
p l on any given day
and also this was a learning experience
like i said i’m learning some of these
higher priced larger time frame
movements
and how to size them correctly um not
expecting
to just um hit it for a lot of size with
really quick momentum moves
and studying letting these plays come to
me
and sizing them correctly really helped
with this trade
and so what i could have done better
covers on the second half of the trade
like i had mentioned
and then possibly adding that momentum
lot
also something i want to kind of build
into is since i had mentioned this can
be a multi-day trade
being able to have a good enough entry
price to be able to
hold a piece overnight for the following
coming days
to try and work and learn how these
plays
play out on a multiple day time frame
and really just being able to
work my average better and
sizing up accordingly once i get more
and more comfortable with these trades
all right so i’m reading here
your comments and and and you write
i i need to always keep in mind the
original idea of this trade as well
as the sizing of the trade
100 i’d love for the next sentence to be
and i’m going to do that
for my trading by doing x y z one two
three
does that make sense i’d love for
you you’re doing a really good job of
recognizing the issue
i’d love for there to be a solution a
specific solution that works
well for you or a specific solution
you’re going to try what i had thought
about trying was
making sure i keep keeping multiple time
frames up
because of this being a larger picture
time frame sometimes i do get
too zoomed in on like maybe one minute
or five minutes
and so zooming back out and keeping like
a daily up or like a 15 to 30 minute or
an hourly up
was kind of going to be my first kind of
stab at trying to
be a solution for that problem yeah
that’s excellent and you can try that
another thing
people do is they actually write down
the target
for the overall trade so they say yeah
i’m going to cover the
i think the cover is uh 165.
i think the cover is xyz that’s and they
write that down on a piece of paper and
they keep that in front of them and they
keep looking at it that’s another thing
and i just want to follow up there
where you say i need to continue to grow
my size in this trade as i learn to
trade better and
control my my risk good and good to
recognize that
i would love again for the next sentence
to be
here’s how you’re going to do that
specifically so i’m going to grow my
size in this trade specifically
by uh xyz123
and there’s different ways to do that
and you want to be thinking about that
but it’s funny i actually think you’re
too hard on yourself
and some are in some respects and i
think you could be more specific
for solutions and you can exp you can
expect yourself to be more specific of
the solutions in other respects and it’s
just so super important to be specific
because i don’t really it’s much more
meaningful to say i’m going to be bigger
in this trade by doing these things by
doing
one two or three it’s much more
meaningful to say
i’m going to hold to target
and that’s the solution for me
focusing on the bigger picture those are
very i mean just
imagine traitor a sitting at his desk
saying to himself i i
i would like to trade the bigger picture
better or consider the bigger picture
better i’d like to trade this
opportunity bigger
versus trader bay who’s sitting there
and in front of him
is the target written out for the trade
which he keeps in front of him
and he is referencing as he’s in the
middle of the trade
and and and also trader b who’s saying
all right i’m gonna risk 30 percent of
my my intraday stop on this trade which
is
three thousand dollars and that me and i
have uh
ten cent i have ten points as my stop so
i can trade x amount of shares and
and do it that way that that specificity
is is really going to grow
is really going to help you improve yeah
100 that makes
a whole lot of sense um and definitely
thank you for bringing it up you really
do want to point out the things you
you’re doing better as well i mean stock
selection terrific
use of the longer term technical
resistance level
terrific finding of a setup that
really has edge overextended
on your daily charts overextended
on your intraday charts up against
resistance
that’s a terrific trade
that’s a trade with edge and
leaving enough leaving enough room
so that you don’t get stopped out not
oversizing it too much you know
really really well done taking some
profits into dips
that’s an excellent best practice you’re
doing so many things well
that that’s really important like every
trade you really want to see the things
you do well because that will help you
do them again and
just anecdotally
i know you play baseball at a pretty
high level so i’ll i’ll share the
the story uh with you so my son’s
playing baseball
he’s seven he’s just learning how to
pitch uh the other day
he gets a chance to pitch and
loads the bases walks the first three
guys
then ball comes back to the mound gets
hit back to the mound
they get the guy at a home plate next
pitch he throws the wild pitch the
catcher picks the ball
up and they tag the guy out at home
plate two outs
and then he gets the he gets the next
guy out
so after the after the game
my son and i could review it by saying
by spending so much time on
why he was wild and loaded the bases
and all the things he did wrong and he
did a lot of things wrong
i mean as a baseball player we could
talk a lot about them his arm slot was
wrong his
he was doing a lot of things wrong and
we could have spent
15 20 minutes talking about all the
things that he did wrong
and all the mistakes he made and how
unacceptable it is to come in the game
and load the bases by walking everybody
and not being able to throw strikes
you know or we could say we could focus
on the fact that he figured out how to
get out of the inning
and he found a way to find his arm slot
and he found a way to minimize the
damage and that’s
a huge positive and then
you know tangentially just note
that hey you you were a little bit low
with your arm slot
you need to get your arm you need to get
your elbow up we’ll work on that in the
next pitching
side session who’s going to be better in
the long run
what is a more constructive way to think
about your performance
the focus on all the things you did
really poorly
or you know really recognizing what you
do well with room to fix the things you
don’t
so i try to give you a baseball analogy
because i
thought you might appreciate that but uh
but think about that yeah i definitely
do appreciate it um
thanks a lot yeah um going forward i’ll
definitely be focusing on that a whole
lot more so thanks for bringing that to
my attention and
giving me some constructive feedback
definitely helps a lot
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