SMB has had a nice run the past three weeks. And as traders we should always enjoy the good times. We spoke to our desk after the Close about one thing that merits some mention. They can do even better.

For the developing trader it is important to keep pushing yourself. If you have been trading for less than three years you still have no idea of how good you can be. If you’re making 2k a day don’t consider this your ceiling because a 2k day is only your ceiling if this is all you except from yourself. And you do not work on getting better. Guys who are making 2k can make 5k a day.

There is no substitute for experience. As you gain experience you will leave poor risk/reward trades alone. In the past you may have been tempted to jump into certain poor risk/reward set ups but with experience you will not. You will also understand your strengths better. You will learn how you make your money. You will learn what set ups are best for you. You will identify when to sink your teeth into a position. And you will search for more of these set ups.

Trading is just a game of math. There are set ups that work best for you. There are set ups that should be avoided based upon your trading style. And experience teaches you what will work. The good trader exploits these set ups and leaves the others alone. So if in the past twenty percent of your trades were made in poor risk/reward setups then when you gain experience only one percent will include poor risk/reward opportunities. This completely changes your trading results.

And as you grow you will add more size slowly to your best positions. And thus you will make 1k in a trade instead of $600. And you will add new trading set ups that offer similar risk/reward opportunities as the others you exploit. You will have a feel for a truly worthwhile risk/reward opportunity for you. You will be able to add profitable new plays to your quiver.

So now your work will not be littered with poor risk/reward plays. Now your work will include your best plays with more size. And now your results will include some more trading plays that you have learned. These results will be far superior than when you first began.

And so for the developing traders reading this post about your results of yesterday and last week, remember that they don’t represent your potential. I told our guys on our desk that I’m happy for them that they have put up some solid numbers lately but even those numbers don’t represent what they’re capable of. And not for one second do they think that they will not be much better than they are today. Because they will be.

One exercise that I perform after the Close will help you become a better trader. It’s one that developing traders ought to do after the Close. On a profitable day review your work. Review your trades and ask how you would have traded this stock if it did not act like you thought. How would you trade this stock if it traded opposite to your bias? Would you still have made money? For the intraday trader you must develop a system that ensures on most days that you will make money when your bias is correct but also when your bias is incorrect. Think about your trades backwards. Consider how you would have traded your setups if you were just wrong in your analysis.

Well-rounded traders have the skills to profit in any market. Well-rounded traders make money even when their bias for a stock is wrong. Well-rounded traders do not just have good runs. They have good runs followed by periods where they grind it out, and pay the bills, while other, lesser traders are getting crushed.

So for the guys on our desk, good work. For new traders who are doing well, that is great news. Now, wipe that smile off of your face and get to work. How are you going to get better?