On Twitter I received this question:
Does the success of ur day hinge on ur PnL, or proper execution? By 1 std I failed 2day, the other = success cc
@MikeBellafiore
@MikeBellafiore
At SMB we do not define success or failure by our P&L but whether we traded well. At the close we do a detailed trading review of how well we traded and not how much we made. This mindset is an important distinction between the thinking of a pro trader from new trader. We are trying to get better each day, and do as well as we can. New traders are trying to make money.
Let’s discuss a specific way we keep score if we traded well. In The PlayBook I suggest that traders develop a series of A+ trades, their favorite setups, and then risk 30 percent of their intraday risk on such plays. For a swing trader you might risk 2-5 percent of your book in A+ trades. One of our developing traders calculates his Missed Profit by not being big enough each day in his A+ trades. As you can see below this trade made 1k but missed another 2k of profit. He could have traded this opportunity much better.
While these are actual trades, I’ve reproduced them here for illustrative purposes only. But the takeaway is to consider tabulating your Missed Profit with your trading. Tomorrow I will follow up with Part II of this blog series with some more ideas to better judge your trading day.
You can be better tomorrow than you are today!
Mike Bellafiore
no relevant positions
