An Exercise 2 Help U Improve as a Trader (RIG)

Aug 11th, 2010 | By Bella | Category: General Comments, Mike Bellafiore's (Bella's) Blogs

Today RIG was the easiest of stocks to trade. 55 was the level. RIG dipped below there. And it trended in the most beautiful downtrend. Were you in this trade?

I wasn’t. This level was discussed during our AM meeting. Again I wasn’t in this trade. We have discussed this RIG level on our desk for days. Oil was weak. The oil sector traded in a downtrend intaday. Did I mention I wasn’t in the RIG trade?

Trading is a performance based game. With stuff like missing the RIG trade, I tend to get mad at myself or something first and then seek a solution. Perhaps it’s the Sicilian blood? Perhaps it is I cannot stand underperformance from myself? But I need to be in this trade. And I would imagine so do you. What is our solution?

So after the Open I will look at our charts in RIG. I will reprepare as if I hit the restart button on the trading day. I will check the news in RIG and oil. What is with this hurricane news? Did the dollar have an impact? Was it just this 55 was the level of all levels, a 10 out of 10? The overall weakness in the market?

And then I will replay being in this RIG trade. I will give the trade a name. I will consider where to add, how much, and where to lighten up. With as much detail as possible I will simulate making this trade. I will talk to some of our guys on the desk about this trade. I will find a trader who made this trade, snatch his video tape and watch it with our desk. I will journal about this A set up. I will make sure that I brand this set up in my head, with all its details, and visualize myself crushing it.

I caught a nice move in this CREE. A couple of the young guys are killing this MON. The day is young and there are more One Good Trades to catch. I will piece together a very profitable trading day. But I missed that trade in RIG. And the only way to get better is to replay it, practice making it, and brand it in my trading brain.

Mike Bellafiore
Author, One Good Trade: Inside the Highly Competitive World of Proprietary Trading (Wiley Trading)

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Comments

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  • John Crandall

    I like the idea of visualizing making successful trades. Ari Kiev, a psychologist experienced in working with Olympic athletes, was hired by Steven Cohen to conduct similar exercises with S.A.C. traders. Coaching them several days a week for a couple years, Kiev found that a belief in success and a willingness to utter a specific target made them more likely to hit that target, and gave them a solid benchmark against which to measure their success.

    People are likely dissuaded by the overwhelmingly negative statistics of day-trading, a success rate of 1% to 5%, and therefore accept failure as the norm, whereas the guys who ignore that statistic and believe that they’re the cream of the crop, so to speak, are the ones that end up becoming successful.

    I think that visualizing trades can be like practicing a trading plan if the visualized progression of the stock follows a realistic pattern that is determined by likely market outcomes. In a sense, it’s no different than what the average trader does all day, except in that, in the visualization, every trade is a total success. Generally, confidence is determined by the rate of past successes vs. failures. So in visualizing good trades, a trader can almost add to his or her positive trading experiences, and therefore add confidence, without making a bet at all.

  • Michelle B

    Implicit learning is where it is at. A very valuable post, thanks, Bella.

  • JCaldwell

    There were so many good set-ups today it was hard to choose which stocks to trade. Lots of alerts going off.

    A nice side benefit of reviewing is that during the day I can ask myself, if I was reviewing this stock at the end of the day, what would I see that I am now missing? It keeps me objective.

    I’m not able to visualize but Dr. Steenbarger suggested auditory and that’s better than nothing.

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