Archive for December 2008

That’s NOT a Short!

Dec 31st, 2008 | By | Category: Mike Bellafiore's (Bella's) Blogs
Yesterday one of our most improved traders was trading GS.  Great stock to be in.  Great job of being in when many were taking off.   This talented young trader, let's call him MROD, developed a detailed trading plan for GS.  MROD saw that 80 was resistance on the longer term chart in GS, remembered that the last time it saw these levels it traded just a bit thru to 80.10, and developed a plan to short GS at 80.10.  This was all excellent.  But then it got ugly.  And he started shorting when GS was NOT a short. Let's discuss. On the longer term chart resistance could be found at 80 in GS.  The next levels for us were Read more [...]

ROH Bounce

Dec 30th, 2008 | By | Category: General Comments, Mike Bellafiore's (Bella's) Blogs
ROH tanked on the Open yesterday. Fading it on the long side was like trying to catch a falling knife. And many of you have heard the Street expression "don't catch a falling knife." These tank jobs in ROH happen everyday. As we discussed during our SMB AM Meeting, it is a mistake for a new trader to try and catch the bottom. Let's discuss. It is human nature for some traders to try and catch the bottom of the market or a stock. Some wish to be that one trader who was correct while others on the Street were wrong. Some desire to be that guy on the desk who calls the bottom and receives the adulation from other traders. But this Read more [...]

Holiday Trading

Dec 28th, 2008 | By | Category: General Comments, Mike Bellafiore's (Bella's) Blogs
I did it again. I do not know what is wrong with me.  I definitely have a problem.  I had about 15 cookies last nite. Delicious! I just can't stop. If I eat one then I will eat 15. I went to three XMAS parties this week. That was one too many. I did not trade very much last week. I missed Monday because I was sick. Tuesday I traded RHT. The rest of the week I was with family. But I am going to trade on Monday. It's funny even though I have traded for over 11 years when I miss a few days I feel out of it. I feel like I will not have a good feel for the market. I am a bit anxious as I write thinking of trading on Monday Read more [...]

Learning from “Outliers”

Dec 26th, 2008 | By | Category: Mike Bellafiore's (Bella's) Blogs
One of the great lessons of trading is how little you know. You must constantly learn. I have to admit I didn't quite understand what a credit swap was till recently. I was in an interview with a very bright young woman who explained to me what she did as a credit derivatives trader. I didn't get the whole thing but I learned a little more. One of these days I will fully understand. Often there are great lessons for us from non-trading books. Steve is always sending me interesting articles from all different sources. Be like him. You ought to read as much as can. You should read about companies. You should read about how companies Read more [...]

Why Trade Stocks in Play?

Dec 22nd, 2008 | By | Category: General Comments, Steven Spencer (Steve's) Blogs, Trading Theory
SMB Capital trades Stocks in Play. Our traders are taught how to find such stocks. And during our SMB AM Meeting we review the best Stocks in Play for a particular trading day. Over the past few years I've had quite a few conversations with interviewees, including "experienced traders", about this core trading philosophy. Some don't seem to grasp the importance of this principle. Let me explain. Our ability to make money consistently as intraday traders relies on our high daily win rate. If you ask any professional trader how many days they are net positive each month they can give you that figure. It is between 80-90% for almost Read more [...]

Build from a Base

Dec 21st, 2008 | By | Category: Mike Bellafiore's (Bella's) Blogs
Those who trade wish to make a lot of money. Traders are not trying to make $200 a day. They want to make much more. And often traders are ambitious. And they have rarely failed at anything they have done before. Perhaps they have been told their whole life that they were special. Most are the smartest person in most rooms. They are uninterested in being ordinary. And they aren't. But all of this can be damaging. So these special, ambitious people start to do some thinking. On a treacherous, rainy day like today in NYC they might let their minds wander. I am ready to start making some serious money they may think. I really need Read more [...]

The Right Daily Stop Loss Amount

Dec 20th, 2008 | By | Category: Gilbert Mendez's (Gman's) Blogs
There is a fine line between failing and making it as a trader. Whether you trade with a prop firm or trade for yourself it is important to have an appropriate stop loss. Having too small of a daily stop loss will keep you out of the game too many times and will impair your ability to grow as a trader. On the other hand, having too big of a daily stop loss will either break your account quickly or will put you deep in the hole during a slump. I believe your stop loss should be proportional to the size of your bankroll and your level of experience. If you are a beginner trader, your stop loss should be smallest even if you have Read more [...]

What if I am Wrong?

Dec 19th, 2008 | By | Category: Mike Bellafiore's (Bella's) Blogs
I made some chops trading RIMM afterhours yesterday. More importantly I learned important levels. A ton of volume was done at 41 and 41.40 was a huge seller. Today my game plan was to aggressively buy if RIMM traded above 41.40. I was wrong. I had expected RIMM to fly after it held above 41.40. It didn't. There was a ton of selling at 60c and 65c and 70c and 75c. RIMM never traded above 41.80. When I bought aggressively above 41.40 I was playing for a big move. And that was what I was expecting. Again I was wrong. When you are developing your game plan before the Open you must consider how to protect yourself if you are just Read more [...]