Archive for January 2009

Do Not Give Up On The Best Setups

Jan 31st, 2009 | By | Category: Fundamental Plays, Steven Spencer (Steve's) Blogs, Trading Theory
There are several setups for intraday traders that offer the greatest risk/reward.  An essential part of our job is being able to identify these setups and not to abandon them if they fail to reap a reward initially.  One such setup was offered in CAT this past week.  CAT gapped down on abysmal earnings.  It spent several days flirting with breaking down below 32.  But it just wouldn't break down.  The first few times it dropped 32 it wouldn't stay below for very long.  And on Thursday when it finally cleanly broke below 32 it only dropped 30 cents.  31.70 became a support level. There were several traders on the desk Read more [...]

Making Money IN AMZN

Jan 29th, 2009 | By | Category: General Comments, Trading Theory
So I ran out of the office after the Close to grab a couple of slices of pizza.  By the time I got back AMZN was trading up 5 points.  About six traders on the desk were actively trading it in the after hours.  I quickly gathered some information from those who had been watching it.  There was selling at 55 and 55.10.  We were all going to get long above 55.10.  When the seller lifted AMZN traded up fairly easily to 56. I find trading in the after hours somewhat easier than market hours if a stock is truly In Play.  There are only a few patterns that take place in the after hours based on an earnings report and there are Read more [...]

Trading Unusual Weakness

Jan 27th, 2009 | By | Category: Steven Spencer (Steve's) Blogs, Trading Theory
Many short term traders get killed trading weak stocks on the short side.  What is the root cause?  The most common error is they have poor entry prices.  We all know that a stock in rapid decline is on the radar of every day trader and hedge fund on the Street.  This attention creates spikes that some interpret as a possible reversal.  Short term traders must always protect against a possible reversal so they will cover and take a loss even if they believe the stock will trader lower.  Let's look at a couple of recent examples on how to get involved relatively safely in short positions that offer great potential reward. On Read more [...]

Learn How to Score

Jan 26th, 2009 | By | Category: Mike Bellafiore's (Bella's) Blogs
I shorted ROH in the Premarket.  Chop!  I shorted CAT on the Open.  Chop!  And then CAT got hard.  I made some and I lost some.  And as I like to kid our desk, then people started bothering me. Roy generally bothers me first about something I need to do for him.  Roy runs SMB Training.  So if you are interested in learning some more about our training program that we created for our proprietary trading desk, which we recently offered to the public, then he is your guy.  Then Charlie starts bothering me.  Charlie is so polite.  "Mike are you trading?" he always asks first.  But still he is bothering me none the less.  Read more [...]

Bidding, Offering, or Sweeping

Jan 25th, 2009 | By | Category: Mike Bellafiore's (Bella's) Blogs
The most difficult thing for us to teach is when to bid and offer or sweep. To sweep means to pay the offer and potentially through the offer if you want to get long. I set my sweep key to pay the offer or through the offer by up to three cents. This is a matter of preference. Some traders set their sweep key to pay through for up to ten cents. So if I want to buy STT when the 18 ARCA seller lifts, that seller lifts and I press my sweep key, then my sweep key will hunt for the best price possible all the way up to 18.04. I cannot just write a lecture on bidding and offering or sweeping and expect our traders to master this topic. Read more [...]

Trading Multiple Asset Classes

Jan 23rd, 2009 | By | Category: General Comments, Gilbert Mendez's (Gman's) Blogs
From time to time I get asked during interviews if I trade other asset classes during the trading day. My answer is always yes and no. I do longer term swing trades in the FX market but no, I do not trade both FX and equities intraday very frequently. When I do I tend to lose my focus and do not trade them that well. I do not know a lot about fixed income, options or futures so I will not even try to pretend to explain which one is better to trade. I do know enough to know that they all trade differently. The trading fundamentals are the same but they all have different volatility, volume and risk profiles. The reality is Read more [...]

A Day on the Street

Jan 22nd, 2009 | By | Category: Mike Bellafiore's (Bella's) Blogs
SMB offers the very best intraday equities training program on the Street.  We meet hundreds of college students seeking an invitation from our desk.  And many ask what it is like to trade with us.  Before anyone is asked to accept an invitation we mandate that a candidate meet with traders on our desk.  A candidate may ask any question they would like to our traders. And this is the way it ought to be.  I am a partner.  Steve is a partner.  GMan is our Head Trader.  JToma, one our Senior Traders, is not credible (just kidding).  But his training over a decade ago consisted of being ordered to do twenty push ups everytime Read more [...]

System Writing Without Trading Skills

Jan 21st, 2009 | By | Category: Gilbert Mendez's (Gman's) Blogs
Every now and then we receive emails from new traders seeking capital to trade their systems. Their academic backgrounds are impressive. They all have worked very hard at fine tuning their strategy based on historical data. They tend to be avid technical analysis students. Most have crunched statistics on their systems to support their claims. However, most lack the trading skills that will help them succeed and stay profitable in the long run. The thing that most new traders do not understand is that actually developing trading skills is vital. It is not so much finding high probability trades, it is also finding ways to make Read more [...]