Close The Gap!

September 20th, 2016               I work with a lot of traders trying to "make the turn" - that is the turn to consistently profitable. Among the plethora of issues preventing the average trader from being consistent, one has come up rather often recently. The gap. The gap between what you see as great opportunity at the end of the day, in hindsight; and what you were able to see at the hard right edge, in real time. The more we can close that gap, the better traders we will be. I'd like to highlight a few key solutions you can apply immediately to help you get there. (Spoiler alert: Read more [...]

Next Step to Improve Your Playbook

September 20th, 2016 Yesterday we talked about how market neutral options traders usually generate their best returns when directional equities traders are struggling to find opportunities. Here's one practical way you can begin to add market neutral options to your playbook. Action: Use midday as options time The best opportunities for short term equities trading is at the open and close of each session. The middle of the day is typically quieter and is when options traders actually like to negotiate their adjustments. Establishing a routine of thinking about market neutral options opportunities during the middle of the day is a great Read more [...]

Trades We Make When Volatility Spikes

September 19th, 2016 In this video Steven Spencer discusses trading during volatile periods. Read more [...]

Volatility Has Returned, But for How Long?

September 19th, 2016 Here's something that you can learn from and potentially add to your trading to increase your chances of being profitable every month. SMB added an options trading desk a few years ago. Over that time we have seen a very valuable pattern develop. When directional equities and futures traders are struggling with low volatility, the options desk is usually doing very well. Conversely, when the options desk is struggling with sharp increases in volatility, the equities traders are doing even better. The most important part of this relationship is that each desk outperforms the other when it's their time to shine. And many Read more [...]

“Just Tell Me What to Do”

September 18th, 2016 Developing traders are sometimes humble (or desperate) enough to make a request for help that sounds something like "just show me", "give me a step by step", "what's an if-then that I can use", etc. The response we provide is usually disappointing. The developing trader wants the answer to begin with "whenever you see this happen, do this...". However, our answers usually repeat a list of principles that matter for each type of trade. “The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.” -Ralph Waldo Emerson We have programs Read more [...]

Building your trading team

September 18th, 2016 Performance isn't exclusively about skill and strategy.  In fact, one top coach leaves all of this out of his top three keys to building a team. This is interesting to us as traders, as some of us trade in teams or something like teams, for improved performance. Team Trading is part III of our training for new traders on our desk.  Team trading is present at Hedge Funds and institutional desks but uncommon at prop firms.  Most prop firms employ the mentor/coach infrastructure, with some more successful than others. I am not here to argue which is better, just that we have settled on Team Trading, with great appreciation Read more [...]

Stay away from these stocks

September 17th, 2016 Hi Michael, I love One Good Trade. A book on Trading has never been so insightful yet so simple and engaging. Even Mark Douglas and (xxxx) can borrow a leaf or two from the simple, familiar language. I love it. Currently shopping for The PlayBook. Back to trading; in 'One Good Trade' you advise traders to avoid stocks with high short interest even when such stocks are 'IN PLAY'. What you did not make clear is the threshold and rationale. Please answer for me these two nagging questions? What are the possible implications of short interest (high or low) on a stock on intraday trading? At what point do you decide Read more [...]

How to make better trading decisions

September 16th, 2016 In this Ted talk below, writer Julia Galef argues that making good decisions is dependent on employing a scout mindset.  This talk is helpful for us as traders to make the best trading decisions. Galef breaks mindset into two categories: scout mindset and soldier mindset.  The soldier mindset defends their ideas.  This "motivated reasoning" tries to make some ideas win and others lose.  Contrast that with the scout mindset, where you try and get an accurate picture of what is really there. How does this relate to trading? "TSLA has to trade lower.  Did you see that article today on Bloomberg comparing it to VRX?  Read more [...]