Mike,

I am only thru day 4 of your 10-day beginner lesson plan, so forgive me if you have covered this in the 10-day course or The PlayBook, which I will start this weekend, but do you have any advice for newbies on certain  investment (trading) vehicles to stay away from until we are weaned so to speak? I am thinking gold-miner ETFs or stocks with a lot of slippage. I am thinking such make a 5:1 setup difficult for an intraday plan. It may have been in The PlayBook, but I read it so fast, I may have missed it.

I am a long time investor(occasionally temporarily(bull market) successful), turned swing trader who has always thought day trading was for the crazies or those with some secret black box formula they designed in some super computer lab. That is until I came across you and SMB Capital in the Stock Twits book. I have times at work where I can trade and would like to become consistent with it over the next 5 years or so. I would like to not fall into a pit by getting into some vehicle that is difficult to trade and become discouraged at the outset. I am capable of  being self taught with a little direction. I am an anesthesiologist. Getting through medical school and my post graduate training were long self teaching experiences, and my whole career has been about learning new things through observation and reading. Anesthesia is a very humbling specialty at times and requires frequently changing plans. I have had some very uncomfortable situations over the years and have learned to do the things that keep me, and my anesthetized patient,  out of these as much as possible. Sort of like hitting the bids when your stop is reached!  I am over being right! I just go with the probabilities.

I don’t want to bore you, but I can tell you like to teach, and I know teachers like positive feedback from their pupils.  I am offering some feedback in return for an answer to my question above and one more. Get the picture. I have traded some the last two weeks for the first time, as I had a couple of days that I got off early or was off.  I am at the “See Spot run” stage of tape reading (thanks, One Good Trade). Tuesday or Wed I happened to get home early.  I had been watching the market a little and my investment positions were all flat to a little down, when I noticed my total balance start to jump up a little. I quickly realized that PLUG was sqeezing again. I opened the minute chart on it to see the first two candles of the breakout with volume. Told myself it it goes thru $6.30 I am piling in. Which it did and I did.  I traded it successfully on the run up taking out some profit.  I realized later that though my entry was good, my exits were just arbitrary and without any real plan. Not One Good Trade, though profitable. Sort of like scoring 5 runs in the first and still losing in the bottom of the 9th by one run.

Thursday and Friday morning I saw setups where I had successful short trades for the first time in my life.  I even had to reverse my play twice and it worked!  Had a few stop outs on the way, but I did not dig a big hole that I had to dig out of.  So I am taking baby steps.

At some point I get an SMB Twit about WUBA. I am thinking, how many examples did Bella give of trading something for the first time. I pull up the screen and see a parabolic move in progress. I went long 1000sh and was up $250 in literally  20 seconds  or less. I am thinking, now this is trading!  Took my profits arbitrarily, emotionally based.  Checked my other positions.  Looked back and it is still moving. Bought again at what happened to be the high of the day, as I had not taken time(there wasn’t any?) to check where a resistance level would be.

Bubble bursts, gravity takes hold. I got out but it took a minute, and  I was down $1200 for the day in WUBA. It bounced and my emotions got me back in long before it dropped some more. I realized I had to get out again. Down around $1900. Took a breather and thought about your book, examples of Steve fighting his way back from a big intraday deficit.

I decided, OK, I am going to play by some rules and fight back to positive if it takes all day, but I am going to hit my stops when they are reached. It took most of the day, and required both short and long positions.  Had to get out of the short a few more times.  Finally got positive $250 late in the day when it moved the way the charts said it should.  I would have only lost $500 if it had gone back up, but I would have stopped out. Very late it had a weak bounce where I told myself that if I were a trader I should play again as the bell had not sounded. Made another $120 even with an errant key stoke costing me $150 in slippage.

I could have been too relieved to be out and been scared to get mack in, but no, I felt like I was on the smart money side for just a flash and went with my head, not my emotions.  It was literally like seeing some money laying on the ground and going over and picking it up. One very bad trade, followed by a bunch of Good Trades, One at the time.

Anyway, long story short; I learned that I really should do a little homework before diving in, that I did not have to be right  to make a profit, and lastly, but most importantly, that money management was the key to surviving and prospering. Huge baby steps! You have my full permission to use my experience as examples of what not to do. (edited)

If you have time to reply, thanks! Even if you don’t I hope you enjoyed reading about my experience, knowing you influenced it in a very positive manner.

@mikebellafiore

1. I have found Gold and Oil stocks difficult to intraday trade for Newbs. They touch too many prices. They reverse too often.

2. Before we trade a stock we suggest traders fill out a Stock Data sheet. This is the mandatory basic information you need to know about a stock before you should consider trading it.

3. I love how you are taking our free 10 day training program. This is a first step towards building a trading foundation. The next would be a formal and intensive training program.

When I read your email I must admit I cringe. Sorry. There is a lot of good with your trading game but you are going dangerously fast. This is not all that surprising as obviously you succeeded at many things in life so why shouldn’t trading be next.

But you need to SLOW DOWN. And respect how hard you had to study and train to become a doctor. Trading is going to be a similar commitment. Some words from Mr. Billy Joel from Vienna:

Slow down you’re doing fine
You can’t be everything you want to be
Before your time

You should not be playing around risking thousands intraday without formal training, a track record of trading success at smaller size and with smaller risk limits.  I know exactly what your next email will be to me if you do not SLOW DOWN. That is the I RIPPED UP 50K NOW CAN YOU HELP email. Let’s save that 50k please.

Get some real training, trade live with lesser amounts, and focus on building your trading foundation. If I read a book about administering anesthetics and then told you I walked into a hospital and tried it on a patient, you would cringe at my tale. (And then perhaps report me to the local authorities.)

I hope that helps.

Thank you for sharing your story with the trading community.

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Mike Bellafiore is the Co-Founder of SMB Capital and SMBU, which provides trading education in stocks, options, forex and futures. Bella is the author of One Good Trade and The PlayBook.

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