I am All-In (a new trade)

I have been thinking about a new trade, I am All-In.  I have been thinking about this trade for a few years and how it would work.  One of my guys during his review after the close on Friday is working on it.  Let’s start by reading his review (edited).

I went for it with an A+ trade.  I had 8 or 9,000 shares at one point.  Now maybe I

overtraded it but I ‘m working on taking shots when I think a stock is ready and it just looked 3 or 4

times like it was ready to blast off.   That is a play where I am gonna pull out 5 or 6 grand at least if

the trade works.

During The PlayBook webinar series, created as a prelude for my next book The PlayBook, we have discussed the concept of A+ trades.  First you build a trading PlayBook of setups that make the most sense to you.  Then you ferret out the best of those trades, which we call A+ trades.  We set risk rules for these A+ trades.  For the intraday trader if you see an A+ setup you MUST risk 30 percent of your intraday loss.  If you are swing trader you MUST risk 2-5 percent of your trading account.  This is a powerful exercise to help you trade bigger and make more P&L.

But what about the best of best A+ setups?  As a trader there are times when we are trading when we spot our A+ setups and just SEE IT.  By we just SEE IT I mean we see two things: a) the position has an incredibly high chance of working, b) the trade will work RIGHT NOW.  The ability to Read the Tape helps us SEE IT.

For this setup, perhaps also called the I SEE IT Trade, I propose you risk your entire day.  You risk your entire intraday stop loss.  So if your intraday stop loss is $3,000 and you determine you can get out of 15k shares with an average loss of 20c then you MUST have a position size of 15k shares.  You are All-In for this trading session, as they say in poker.

One thing to consider is the psychological risk for this trade.  A rip that bums you out is good.  A rip that causes trauma is bad.  If the rip causes trading trauma then get rid of this trade.  Trauma harms your trading while disappointment is just your journey to getting bigger.

Also, you may only see this trade 3xs a month.  These are special trades.  These are the best of the best A+ trades and only when you really SEE IT.  If you think you SEE IT 1x a day then we need to work on what this trade really looks like for you.

Finally this trade takes advanced trading skill and discipline.  Here’s how.  After you are All-In the trade should start to work for you immediately.  This is why you went All-In.  If the trade doesn’t work immediately then you MUST start piecing out of the position slowly.  Offer some out.  Offer some out hidden.  Hit a few bids.  Offer some more out.  Slowly and with trading care, get back to the size of an A+ trade.

I would love to hear your thoughts on whether you think this would work for your trading?


Mike Bellafiore

One Good Trade

no relevant positions

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