Archive for February 2014

SMB Trading Lesson of the Day: Buying Pullbacks on The Open

Feb 26th, 2014 | By | Category: Trade of the Week, Trading Lesson, Trading Theory
In this SMBU Trading Lesson of the Day, Bella, author of the “trading classic” One Good Trade and The PlayBook, talks about a trading pattern that's been working in this Bull Market. Highlights from this trade: 1) This pattern works extremely well in a Bull Market. 2) Incorporate this strategy into multiple timeframes. 3) LOW gapped up significantly on earnings; see Mike’s thoughts on how he planned to trade this after watching HD trade yesterday. 4) After the gap up, LOW was extremely weak on no news, but then it reversed strongly to the upside. 5) Are traders getting too aggressive on the sell side as a Read more [...]


The Challenge of Letting Winners Run

Feb 26th, 2014 | By | Category: General Comments, Marc Principato, SMB Forex
You know the following situation well: You had a long in EUR/USD at 1.3005 and sold it at 1.3018 only to watch it go to 1.3086 over the next hour. Of course when you try and hold for these type of moves, you give back your 10+ pips plus some additional when your stop gets hit. How do we know when to hold for a larger move? In other words, when do we let our winner run? The real question you have to consider is this: What is the significance of the price area where you are initiating your trade? Newer traders lack the experience and ability to gather the most relevant information from the market and as a result have no point of Read more [...]


Free Options Webinar: Greg Loehr—Taking advantage of AAPL’s low implied options volatility

Feb 25th, 2014 | By | Category: Greg Loehr, Options Education
SMBU’s Options Tribe is an online community of options traders dedicated to sharing successful options trading ideas with all of our members worldwide. Each Tuesday, SMBU hosts an options webinar—the Options Tribe—during which veteran options traders and experts in the world of options trading share live presentations. Next week, Greg Loehr returns to the tribe to discuss ideas as to how to play AAPL’s very low options volatility with options.. Options Tribe meetings are free to the public on the first Tuesday of each month. All other meetings require an annual membership to OptionsTribe.com. If you are not a member of Read more [...]


SMBU Trading Tip of the Day ($VSI)

Feb 25th, 2014 | By | Category: General Comments, Trade of the Week, Trading Lesson
In this SMBU Trading Tip of the Day, Bella, author of the “trading classic” One Good Trade and The PlayBook, talks about the importance of execution with an example in Vitamin Shoppe (stock symbol $VSI). Highlights from this trade: 1) You can turn a very good trade into a losing trade with poor execution. 2) Trading is a skill. 3) Market "calls" are not as important as trading skill. 4) Watch Mike "call the bottom" in $VSI in real time and time-stamped on SMB Real Time, and then honestly discuss a trading execution error that kept him from optimal gains. 5) Pro traders mess up all the time. We hope you Read more [...]


The Second Step to Systems Success

Feb 25th, 2014 | By | Category: Systems Trading
Last time we talked about Risk, which is the first and most important aspect of a trading system. We discussed how limiting risk can create higher absolute returns because of reinvestment, raising capital, and using leverage. Now we can talk about our second focus: Returns. There are three types of returns that we need to understand. First is the back tested returns. An automated system should generate back tested returns. These returns should cover different market conditions and include enough data points to be relevant. The second type of returns to track in automated systems is simulated returns. These are accumulated Read more [...]


Randall Liss: Designing an Options Trade Around Your Market Opinion

Feb 24th, 2014 | By | Category: Options Education
SMBU’s Options Tribe is an online community of options traders dedicated to sharing successful options trading ideas with all of our members worldwide. Each Tuesday, SMBU hosts an options webinar—the Options Tribe—during which veteran options traders and experts in the world of options trading share live presentations. This week, Randall Liss returns to the Options Tribe to accept tribe members' directional view of stocks or indices, taking into consideration that trader's viewpoint on the time frame of the expected move and its likely velocity. Options Tribe meetings are free to the public on the first Tuesday of each Read more [...]


A Trader’s Trading Path From A-Z

Feb 24th, 2014 | By | Category: General Comments
This Thursday I will speak to aspiring traders at Pace University. As I prepare for my discussion, I have been thinking of a Trader's Trading Path From A-Z. A. Read about the markets when you are young. If you enjoy reading about markets, then read more. B. Start playing with putting together trades in simulation. C. If you find some success in simulation, then open up a small trading account. D. Start training: improve your trading game in high school and certainly by college. E. Build a trading foundation: so you have the skill to make fundamentally sound trading decisions. F. Build Your PlayBook of the Read more [...]


The First Step to Systems Success

Feb 23rd, 2014 | By | Category: Systems Trading
Risk. This is the first and most important metric for a systems trader to track and improve. When learning about a system or strategy, most people first ask about the returns. Imagine you had one program that generated 21% per year on average and second was doing 35%. For some, the analysis is over because they just want higher returns. But what if that second program had draw downs of 12% and the first had draw downs of just 3%? At the beginning, when your account is small, the focus is on generating returns. In the real world, traders want to add size. This can be accomplished by reinvesting profits, raising money, Read more [...]