One Trick Pony: The Sequel

Hello Mike,

I hope you are feeling great. I sure am. I’m not sure if you remember, but you did a post on me called “Getting Back in Trading Shape”. I have started trading cash equities along with commodity futures, and I’ve reduced my position size to 25% of what I was trading in futures, i.e. trading relative to a/c size rather than leveraged trading in both products.

I started day trading 2.5 years ago. I’ve had only one big five-figure winning month out of 30 months of trading, and for the other months I was losing big, losing moderate, losing small, breaking even. I have identified one setup which I do well in terms of execution which is robust: “time frames confluence core” and size addition based on tape for scalping the core.

In the last three years I have been weeding out plays that don’t make sense to my personality type, and I only have this one setup that I truly believe in or have a conviction in.

My question is this: Is it okay to stick to one A+ setup and execute in multiple markets rather than multiple sub-optimal-grade setups in few markets?

Bella

In One Good Trade I wrote about traders who I labeled a One Trick Pony.

I have written about the danger of being a One Trick Pony on the SMBU Blog here. As one SMBU reader asked, how about being a One Trick Pony and applying that setup to other products?

You have done excellent work above ferreting out what you do well and what doesn’t work for you. It is a huge accomplishment to move from losing money to making some, even if that is in mostly one trade. Keep on your path to consistently profitable trader.

Here is an idea to consider. What are the variables of the trade that work best for you? How can you find similar trades with similar variables to expand your PlayBook from the one trade that makes the most sense to you? For example, those who trade Trend Trend Trades well can most likely trade Intraday Trend Trades profitably also. That is just one variable less than the Trend Trend Trade. I suspect that one trade can be like some others, which means that your PlayBook can grow. You have the ability to execute in real time as demonstrated by making cash in your favorite trade. Build from this.

The biggest danger with relying on one style of trading is that eventually it will be gamed out of the market. From your base now of positivity work to add new plays so you are more well-rounded trader.

I hope that helps.

You can be better tomorrow than you are today!

Mike Bellafiore

One Good Trade
The PlayBook

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