Today we've asked Michael Bellafiore from SMB Training, to give us some advice for frustrated traders. Enjoy.
I had an interesting conversation with a young trader from another firm today. This young trader pops into my office from time to time and talks trading. He is a very bright and competitive young man. And he is struggling. He killed it in October, but over the past two months he has dug himself a huge P&L hole. I have been hearing a lot of stories like this lately.
A trading friend of SMB Capital told us that one of the best ten traders we know gave back his whole year last month. While I was getting breakfast today a few nervous young traders from another firm stopped me to ask how our guys were doing lately. They relayed that many in their firm were "decidedly negative". I have heard that a few Tier I day trading firms recently restricted trader losses going forward. I was at an awesome holiday party recently, with incredible views of the NYC skyline, and one of the best traders on the Street was practically crying to me about how badly he has been trading. I felt bad for the guy. I spoke with two energy traders this week at the Reebok Club who offered that they were probably going to be fired. The reason for their likely termination: failure to cease losing great amounts of money. I know that for SMB, last month presented a challenge to some of our traders.
Personally, I don’t have a bad month. I have traded through enough markets that I have developed a trading system for myself that allows me to profit no matter what the market. Last month I was positive. And, I will share what I said to that young trader who was worried about his future. You need more experience. You need to see some more markets. You need to make some adjustments. You need to go back to the basics.
One of our bright new traders, a graduate of the best undergraduate business school in the country, who has been struggling, made a list of plays that he will focus on this month. Great work here… But there were a few plays on his list that I didn’t even understand. They were technical plays that I did not use. And I will share what I told him. Trading is about finding weak stocks and getting short at levels that offer an excellent risk/reward. Trading is about finding strong stocks and getting long at levels that offer an excellent risk/reward. Do not make things so complicated.
Continue reading "The Cheetah and the Trader" HERE
3 thoughts on “The Cheetah & The Trader”
Great post Michael,
Every one can make money in the market every now and then. The key is making money consistently and to do that one needs to have trading systems and a trading plan. Ofcourse, discipline is the other key ingredient - discipline to trade to your plan.
Thanks for the vid too.
I agree; trading systems are the key. While everyone else is losing, system traders (including me) are watching the profits roll in. I actually thought that most traders used systems, but I guess not. I was thinking about getting back into my old manual style of trading, but your post is a good reminder to stick to systems.
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