Trading Off of Levels: How a Real Trader Works
May 18th, 2013 | By Bella | Category: Mike Bellafiore's (Bella's) Blogs
There is this developing trader, who sends me a summary of his trading at the end of every week. I asked him to do this so I have data on whether we should hire him for the desk. He's not quite ready but I love to see his progress. Mostly I want to see how he handles success and failure and how he rehearses, practices, and thinks about his craft. In short, mostly I want to learn if he fits our culture. Guys who do and who have a passion for trading are worth my time and capital.
The Financial Media Entertainment Complex paints a trading/investing game of picks and predictions. In the real trading world real traders struggle, lament, tweak, re-tweak, and search for improvement. The email below Read more [...]
Hi Mike,
I am a beginning stock trader. As I have another job to support me during my learning curve, I cannot trade intraday and instead I focus on swing trades that can last a couple of days.
My problem is that during those couple of days, you can have all kind of news that can reverse the trend and make the trade fail. What I am struggling with is when to change my initial plan and when to just leave the trade with its initial stop loss/target profit? (I can amend a trade just after the open and a bit before the close.)
BTW, I loved you book! Before that I didn't know there was a difference between a prop trading firm and a hedge fund :-). And also, it's good to know what the benchmark 
Good evening Bella! I wanted to fire off a quick email to you, and if you had time to respond or post it, I would greatly appreciate it. I just need some input from someone who has observed intraday traders for years, to gauge where I'm at. I started prop trading last August, so it's been nine months. Before that I had dabbled in the markets with a focus on daily charts and pattern recognition. I do a lot of the "hustle plays", i.e., archive trades, trading journal, go thru charts, news, etc., and that all adds up to lots of time. OK, since last August I haven't made money. August thru December was consistent losing. I climbed a big mountain back so far this year, and am basically at break-even 
Below is an email exchange between me and an SMB Reader, who is a pretty good trader. We discuss how to improve his Breakout Trade attack. This blog post ends with related past posts.
SMB Reader
Mike,
The Thursday after you visited the big CT hedge fund you very briefly mentioned, "They play all breakouts the same way, paying up over levels."
It's been replaying over and over in my mind lately.
Is the risk the breakout level?
@mikebellafiore
Yes.
You want the stock to work, move away from the resistance and hold above the breakout price.
Trade well.
SMB Reader
Mike,
Is there a "last thing" that traders have to push through to get there? I feel like it's at 
Hi Mike,
I have a couple of questions that I would like to ask you.
First, what is the success rate of new traders once they go through the SMB program? And second, in your opinion what would be the ideal number to start a trading floor with? I realize you might refer to how much capital is available but I’d like to know your thoughts. For example, is it better to start with five new traders or ten? Maybe more? I’m only looking for your words of wisdom.
Trade well and thank you for your time.
@mikebellafiore
We get asked to help start or consult on starting prop desks globally. We have responded to inquiries from Brazil, Russia, South Africa, India, Singapore, Hong Kong, Canada, 
Hi Mike,
1. Trade only the MOST in play stocks in the beginning as they have the best chance to move regardless of market action.
2. Wait for the market to break previous day's range or some similar range from previous couple days trading.
3. Establish the the market itself is in play. Is there significant economic news, political unrest, or earnings news from a major company?
I hate to bring too much of a bias about the market into my trading each day. I would rather wait and let it show me. Often by the time is has shown me it will do very little I have already been chopped in failed setups.
Of course the risk in waiting for some of these signals may be missing 
I have a question, but here is the background. I have a VERY small trading account as a trader for a Prop firm. It is an account with $16,000 in buying power and a 40-share max with a $25 loss limit (I'm in my firm's 18 month trading program and started with a $2,000 account and account grows as your skills improve).
I tend to like trading High beta stocks with huge ranges, spreads. Stocks like AAPL, AMZN, GOOG, NFLX, etc. My default tier size is five shares. I tend to go into a trade with somewhere between 5 and 10 shares to open my position. If I apply good risk management, I stop out of positions between $.30 and $1.00 per share out of the money, depending on the stock being traded. As 
Good day Mike,
How is work and family. Please, I need you to clarify a few things for me. I want to know the role the following indicators play in selecting stocks for day trading.
1. Beta: what value will you use in determining stocks to play(buy/sell or stay away from)
2. ATR
3. ADV
4. Relative Volume:How to determine it
5. Short Interest: How should I relate this to stocks to buy or sell.
Thank you for your anticipated cooperation.
@mikebellafiore
There is certain information we want to know about a stock before we trade it. When we first started SMB we created the SMB Stock Data Sheet. This was an example of all the information we wanted our traders to know before 
