Five Ideas for Your Trading Future

Jan 16th, 2013 | By | Category: General Comments, Mike Bellafiore's (Bella's) Blogs
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Dear Mike,

My name is (deleted at e-mailer’s request) . I have written to you a couple of times over the past few years and have always found your advice helpful. You even were nice enough to give me a call a year or two ago after I had sent you an e-mail asking for advice. I am a fan of your blog and book, as well. I am writing to hopefully get some advice regarding my trading career. I started daytrading full-time at the beginning of 2009. I got started by watching a guy I know who started trading in the late 1990s. I basically learned to trade in the same style as him, which is essentially a mean-reversion fade-type trading style. This is the method I’ve employed exclusively since I started trading. My net numbers since I started trading are as follows: $XXk (9 months of trading in 2009), $XXk in 2010, $XXXk in 2011, and $XXk in 2012. While I have been profitable each year and have only had a couple of down months over the past few years, I recognize that my numbers are not outstanding and I hoped to be doing better at this point. I spent the first year of my trading career in an office with one guy (the guy I learned from) and have been on my own for the past three years. I’ve been in a slump since this year started, and am up less than $1,000 for January after losing money for four straight days. I know this is not the end of the world, but I just don’t feel like I’m progressing like I would like to.

Part of the reason for this is that I generally do best in volatile, high-volume periods. For instance, my best month I’ve had was nearly $XXk in August of 2011 when the debt ceiling negotiations caused a lot of volatility. I am finding that I am just not seeing many trades that I like, and as a result I have been overtrading and forcing trades I should not be making. Or I will make a trade that I think looks good only to be wrong and have to hit out for a loss. Sometimes when this happens, I get so angry and revenge trade and end up losing more money.

I just found out that the guy I learned from is trying to phase out from daytrading because he has steadily seen less and less opportunity over the past couple of years. Although I live in a different city than him and have only occasional contact via text, it is a little discouraging to hear that the guy I learned from and the only other trader I know personally is moving away from daytrading. I am starting to think that maybe I should do the same and that I should consider looking for another job. After trading for the past four years, I’m not even sure what I’m qualified to do even though I have both a college degree and an MBA. I don’t really want to leave trading, but if I don’t start doing better or feel more optimistic about my chances of improving, then maybe it is what I need to do. I know you guys have some resources that may be helpful, but I also know that I trade in a style that is quite different from those at your firm: mine is a mean-reversion strategy trading stocks that trade under one million shares a day. Any advice you could provide in relation to both my current trading and future would be greatly appreciated. Thank you.

P.S. I know that sometimes you publish e-mails on your blog.  If you do decide to publish mine, I would appreciate it if you left my name and P&L numbers out of the post.  Thanks!

@mikebellafiore

Your number are better than 99 percent of intraday traders so let’s not loose sight of that. Our game is a lot harder and it is what it is. In my next book, The PlayBook, I talk about the future of intraday trading. I see the future as bright but not based on the business plan of become a consistently profitable intraday trader and then get bigger. The margin of error is too small for most with this plan. I do not want to give away what’s inside (since it would be nice if you bought my book) but I will give you some ideas to consider for your trading.

1. Many intraday traders are also trading options.

2. Too many of us are sitting in trades that are not our strength. We must be equipped with proprietary tools to find all of the setups that are our A+ setups. We say to be a bionic discretionary trader. And I am not talking about some off-the-shelf filters. I am talking about proprietary trading tools that can be tweaked by quants and daily so you are in the best setups.

3. Develop models. There is software now available that allows you to build trading models without the ability to code.  You are a pattern trader. Express those patterns as a bionic discretionary trader and discretionary quant trader.

4. Get more bank roll. We had a well-known coach in the other day talking to our desk. One of our traders who has been profitable 18 months in a row talked about getting bigger. This A-list trading coach told him to keep after it just with more buying power. Do not change anything. Just see your trades as a percentage of your bank roll, increase that bank roll and keep putting money into the market as a percentage of your buying power. Genius way to look at the markets.

5. Get a coach. Almost all elite performers have coaches who help make them better. Traders are no exception contrary to popular misconceptions.

So those are just some ideas to help you improve. If you are interested in discussing how we do this at my prop firm, please shoot me an email mbellafiore@smbcap.com. Thank you for sharing your trading story with us!

Mike Bellafiore

One Good Trade

 

 

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  • Profader

    Trader,

    Don’t give up trading. Even with that MBA unless your dad is the CEO’s friend jobs pay like 40K a year now that used to pay 70K/80K per year.

    This is the new normal. After tax your daily take home pay is like 150. You really want to work all day, take a lot of shit from some dick/bitch, for 150 per day?

    Even if I can only make 40K a year from trading, I would still rather trade in my underwear listening to my rap music and looking at porn if I’m bored and drink a beer than put up with the corporate bs.

    Just realize that you have to do more research, determine ahead of time what stocks there is a potential for a play, and never guess or gamble on a stock you know nothing about, and trade less. On days when there is nothing going on or it looks completely dangerous, just don’t trade.

    On days when the volatility is there and there is large money flow, max your size, get greedy and make as much as you can. Then the next day, never go into the trading day thinking you need to do what you did yesterday.

    What the market gives you is a gift and you need to just learn to surf the waves when they are there and get out of the way when they are not there or too choppy to ride or too big to surf.

    Good luck. Trading is better than any real job unless you’re a professional golfer or athlete.

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