This Sunday on StockTwits TV at 8:30 PM I will be discussing an Optimal Trading Day.  I will discuss how some define an Optimal Trading Day, how not to define one, and offer a suggestion as to how to define an Optimal Trading Day.

What I mean by Optimal Trading Day is what is a great day for you.  What is the best day for you?  How do you define a perfect trading day for you?

Please share in this blog post and we will discuss on my Sunday night show.

Enjoy your weekend!

When I traded back in the day there were no leveraged ETF’s.  I wish there were.  They offer the intraday trader opportunity.  Whether ETF’s offer too much risk to the market is not for me to decide. What I know is that there is money to be made as an intraday trader mastering them.  Let me offer one simple example that was our Play of the Day.

I am often baffled by the new trader’s opinion of how a trader makes money.  Often they are brainwashed to believe that you must find the next brilliant trade.  And I suppose at some Hedge Funds or Prop Firms traders do and make a ton of money.  But you don’t have to.  You can trade basic setups that have worked since the inception of the markets and master them.  Plays such as a breaking news play.

And today we saw an excellent breaking news play in FAS.  The housing number was about to be released at 10AM.  Some of our traders watched every tick in FAS and FAZ.  The number hit.  SPY spiked above 102, an important resistance level.  Some of our traders then loaded up in FAS.  FAS made a point upmove and paused.  Then FAS made another point upmove and paused.  Then FAS pulled back before making another point upmove.  This all occurred in about 15 minutes.  And this was an opportunity our desk crushed.

This play takes some guts.  What happens if the move above 102 SPY was fake? It takes some skill.  You must get FAS at a good price so your risk/reward is favorable.  Can you exit quickly if the move is indeed fake?  It takes controlled aggression.  You cannot just pay the offer anytime breaking news hits.  It requires mental preparation.  You must be mentally prepared to hold a large position in a volatile ETF.  But opportunity is abound.

Best of luck with your trading! Don’t forget to follow us on Twitter!

OK so we got some weakness with the market today.  Are we starting the leg down that most have been predicting since SPY 83 (oops!).  Was the news about back to school sales the catalyst?  China? Rising foreclosures?  The dollar?  Unemployment?  Government Debt?  Certainly the bears have a multitude of fundamental reasons to support their thesis for a downmove.  And now they also have some price action from today to support their position as well.  Or do they?

I am a short term trader.  I am not an investor.  Honestly I am not sure if we are headed lower now.  I am not sure if this is a great opportunity to buy into a pullback or the start of a downmove.  And I am not going to pretend that I do.   This is not my job.

I am aware of all the bad news.  I am well versed in all of the reasons we ought to trade lower.  It all makes for interesting weekend reading on my Blackberry when I am bored with my TV selections. And I stand ready to short if the market, the price action, shows me weakness.  And we saw some of that today.

Tomorrow absent new news (HPQ?) I will focus on health care.  I will trade UNH, CI, AIG, AET.  I will lean towards long health care stocks if the tape so confirms.

But I will also watch SPY 98.  Below this level and the market will signal perhaps another weak day. And I will have some shorts ready to go if this occurs.

So we will see.   The market offered excellent trading setups in AIG, AET, CI, UNH today.  And I made a few nice trades in AIG.  Might be short tomorrow might be long (“she loves me, she loves me not”).

Before the Open I tweeted:

tons of trading opp out there today. I am pumped…..Bellaabout 8 hours ago from web

Summer trading has not arrived.  So I will sit in my seat and be ready for a variety of possibilities. My vacation is 9/5 and not one minute before.  And until I am actually sitting on a beach, sipping a cold Corona, I will stand ready to pounce.

On a personal note I received an enormous influx of kind words about our Sunday show on StockTwits.  Thank you for watching.  Thank you for all of your kind remarks.  And we will do the best we an to share what the market has taught us with you.

Looking forward to the price action tomorrow.  Best of luck with your trading! Don’t forget to follow us on Twitter!

So last night was my debut on StockTwits TV. And after that experience I have some thoughts for the suits at StockTwits TV.

1 ) Clearly I was awesome. My awesomeness existed on so many levels I find it hard to begin. Have you seen my reviews?

@downtowntrader$$ Must watch stocktwits.tv by @smbcapital – really great job tonight Mike. http://bit.ly/cxgzP

And this guy is from Florida. Clearly we have gone national.

@montaukmack @smbcapital Bella did a great show on $Stocktwits TV!!

This guy is from the Hamptons (well close to the Hamptons). I might be reaching the rich people.

@YMjeff @smbcapital Enjoyed the sunday night session. Will follow more. Wrote down “Tomorrow we can all start getting better” Will remember that! TX

I have such a hold on this guy that he is taking notes during my show.

So networks suits this means one thing for my 8:30PM EST show on Sunday nights: RENEGOTIATION! Come one say it with me,”Renegotiation.”

2 ) I am going to need a few things. I prefer to wear Paul Smith shirts. You can just have them sent to SMB Headquarters, which by the way is on the 5th avenue bitches. And I would like some refreshments for my Sunday gig, preferably Coke Zero (you know what since we are just getting started a Sprite or Canada Dry works for me as well. Make sure it’s cold though.)

3 ) Get that bitch Dr. Phil off my back already. Do you know how hard it is to read my notes, look into the camera, change the cameras, watch the StockTwits feed for questions, talk as awesomely as I obviously am, and read his GChats? Do you think Regis has to deal with this nonsense?

4 ) I am not sure if every Sunday night is gonna work for me. Can we tape a few episodes on Friday evening? Maybe a few reruns from time to time? How many shows does Entourage shoot a year? That might be a better schedule for me.

5 ) Getting back to the refreshments. You know Diet Sunkist is acceptable as well. Just please, no water. Bella doesn’t do water.

6 ) What do you think about a cute, bubbly, blonde co-host or side kick for me? Again think Regis.

7 ) I am thinking we are going to have to up this production budget now that we are clearly reaching the masses. I am thinking a driver to the show, a hot hair and makeup girl, two researchers, a personal trainer, a body guard, a personal assistant, and a chef (hey I need to look good for my fans).

8 ) What is with all these people asking me questions during the show? These people treat me like the NY Press does ARod.

9 ) Getting back to my awesomeness. I left out another example. After the show while I was walking down the streets on the Upper West Side of Manhattan, where many of us TV personalities call home (you know all the soaps are shot there, and again think Regis). Someone yelled out, “Bella.” Now I have played pick up basketball with this gentleman for years at the Reebok club, again on the Upper West Side of Manhattan for all of you lesser people unable to live in NYC, but clearly he had just watched the show. I mean the guy was so happy to see me I thought he was going to whip out a pad and pen and ask me for my autograph.

10 ) Can you people stop being so positive? Enough already with the “great job” Mr. Lindzon. What am I going to complain about if you and Phil don’t have the decency to threaten, cajole, criticize, demean, censor, and control my every action. Come on guys. You are better than that.

So take some time with my demands above. Please respond to the new personal assistant you will be providing me. And I will get back to you, when I get a chance.

Seriously we had a lot of fun last night.  Looking forward to many more to come where we can share some of the lessons the market has taught us with you.   Thxs to all of those who took the time to watch and participate.  We are redefining how content is delivered.

One of the great rewards of running a firm like SMB is the friends we have made from others firms. There are some exceptional firms and people in our field. I am certain that in ten years there will be a dozen exceptional intraday trading firms offering enormous value to their traders. Especially since the Buy and Hold strategy has suffered unfortunately of late.

The intraday trading industry still has a few bad actors. But these bad actors will be eliminated as a firm that does not offer value cannot survive. The internet, social networking, the ease of sharing information makes it impossible for such bad actors to thrive. The good firms will share with you teaser content about what they offer in blogs, free videos on their website, etc, such that you will have a feel for the value they can offer. And most importantly, the good firms will work together, sharing trading ideas, to add even more value for their traders, further distancing themselves from the bad actors.

Steve scolds me everyday for giving away too much proprietary information in my posts. My response is usually, “Go back and write another 500,000 shares intraday Mr. Spencer and leave me alone please.” We are not giving away 1/10th of the value we truly offer to our prop desk in this blog (even as amazing as it is of course). And overall SMB has an obligation to the intraday trading industry to show all the good things done and taught at the better intraday firms (no one does this better than @steenbab). The bad actors will make excuses for why they do not maintain excellent blogs or have videos to share. Your choice will be clear.

SMB is good friends with one of the excellent firms in Austin, Texas, Kershner Trading Group. Andy Kershner shared some excellent ideas with me about implementing filters to increase our trading opportunities. Recently one of our bright new traders (maybe not so new anymore especially after yesterday’s personal best), Joe P, built new filters that make the most sense for how we trade. Thank you Mr. Kershner. And in return I stand ready to help their traders if we can.

And last night I received a question from one of their senior traders…..

Hi Mike,

I saw your post on AIG today and had a question: where did you start buying after it held above 25.75 and then after 27.50?

We played it a little differently than you did. We waited for it to establish the 25.75 resistance, watched the consolidation around 25.45, got long there risking about 10 cents (new lows plus a little wiggle room for the few stops that would trigger) and then covered our long after about 25 cents into the new high…..

Bella Response:

This is a great question. And I like your technique. You are buying into the pullbacks. And this is a profitable trading play for a stock like AIG.

There is no one way to trade the AIG set up. When I see this setup I see many different trading plays. An advanced trader will make all the trades. A consistent trader will stick with the plays he is most comfortable with. A new trader should stick with the easiest trades.

But with this set up I see these potential trades: Buying into a Pullback, Momentum Trade, Trade2Hold, Scalp. All of these trades will work, especially since AIG is In Play.

The best thing about your technique above is that you are holding AIG into the new upmove. This is mandatory for Buying into a Pullback. You need to make 80c-$1 on these trades as your win rate will be lower than a scalp or momentum trade.

For us since there was so much volume at 25, since the bullish flag was created at 25.75, since AIG was in play with upside to perhaps the 30’s, we started a Trade2Hold above 25.75. But we also scalped, played the momentum, bought into pullbacks adding lots to our core Trade2Hold. It’s called trading. We use the plays in our quiver to capitalize with this amazing trading opportunity with AIG.

I look forward to working even more with the excellent firms with whom we are friends. We thank them for sharing their trading ideas and experiences with us. And we hope they are enjoying as good of a start to August as we are.

Best of luck with your trading! follow us on Twitter!

One of our new traders in the June class asked me about what I review when I watch my trading video.  The short answer: patterns that offer clean trades where I can be aggressive.   When I review my work and I see patterns that offer these clean trades I brand that opportunity in my head.   Let’s take a look at just the first hour of SVNT and discuss such plays.

Here was the news:

03-Aug-09 01:29 ET – Savient Pharma receives complete response letter from FDA for KRYSTEXXA; FDA can not at this time approve the co’s BLA for KRYSTEXXA (pegloticase) as a treatment for chronic gout in patients refractory (15.59 )

Patterns I like:

1) There was a battle at 10.65 after SVNT gapped down.  It was difficult to tell if there was more to buy or sell at 10.65.  But then SVNT failed at 10.65 and ticked into the mid 50’s.  I like this trade.  I like this trade a lot.  This is a short for me.

2) At 10.10 a seller stepped down and repeated on the offer.  SVNT had gapped down.  It had a steep downmove from 10.65 on the Open.  10.20 sold aggressively on the offer into the downmove.  And now 10.10 was selling lower and more than I had anticipated.  Also there was protection at 13c, 15c, if the 10c offer lifted.   Short Bella (this trade would not have worked).

3. There was a ton of volume done at 10.10.  The most volume was done here on the Open.  The buyer seemed to win at the 10.10 level.  But then 10.20 held the offer firmly.  Finally 10.20 lifted.

GMan proclaimed,”Oh it’s on.  I am long SVNT.”

I love this long.  10 was premarket support.  The 10.10 buyers won.  And now the 10.20 buyers overwhelmed the 10.20 sellers.  The stock had gapped down.  The first move down was steep.  SVNT had potential for significant upside.  Bella long.  And I am not selling until there is a reason to sell.

So when I review my work I search for these clean trades where I can be aggressive.  These trades will work for the intraday trader.  Our win rate is at least 60 percent.  Our risk/reward is better than 1X5.

What patterns work best for you?  When you review your work brand these trades into your trading memory bank.  Feed your brain with these set ups.  The next time they reappear you will trade them even better.

Best of luck with your trading. Don’t forget to follow us on Twitter!

Panic is not a good thought for a trader.  And during really crazy moves in a stock, when you may be tempted to panic, calm is required.  I had such a situation on the Open with MHS.  Let’s discuss.

So we start the day and Alexander gets me into this MHS.  I wanted to trade something else but he just bullied me into this MHS as most subordinates do (no they don’t!).  MHS is doing this above below nonsense noise at 52, which for all those who carp about the programs understand.  51.90, 52.10, 51.93, 52.05.  Yeah, yeah, yeah.  Nonsense noise.

But 52 is an important technical level.  A hold above 52 might be the catalyst for a significant upmove.    And in fact MHS 52.10 holds the bid and makes an explosive upmove to 52.65.  I wasn’t in this move.  I am certain this was Alexander’s fault I just cannot remember how at the moment.

So I missed the move.  But then MHS dropped out to 52.20 quickly.  I bid 21c, long.  I bid 11c, longer.  I bid 52.01, even longer.  Here I had 3 lots long of a stock that had just shown its strength, right near support.  This was a good position.  Or so I thought.

And then the fun began.  Remember that 52 support level?  Well apparently the buyers at 52 didn’t.  51.60 was MHS’s next stop, where it slowed.  I was long 3 lots 40-60 cents out of the money.  Awesome!

What do I do?  Do I hit the bids and take my rip?  No. Do you scream, “Alexander what have you gotten me into?”  No.  The odds of the stock trading up next are near 80 percent.  The odds of MHS trading up near 90c are very high.  So you remain calm.  You focus on taking the best sale possible.  You will take your rip.  But you must remain calm so that you take the smallest loss possible.

If MHS did not trade up near 52 like it did and next headed below 51.60, then you hit the bids and take your rip.  But when a stock falls this quickly, you missed your exits 40c ago, and now the stock has slowed, then you try and sell the stock into the next upmove.  And this is what I did.

Out 93c.  Out some more 97c.  Flat 52.07.  Crisis avoided.  I took a rip, but nothing to ruin my trading day.

There are times when you are in such a bad spot that I would never even consider panicking.  Immediately I know that I am so screwed that to spend any energy on anything else but processing the best way to exit would be irresponsible.  I need to focus and right now so that I don’t take a rip that will ruin my week.

My mind is quiet.  I am not angry.   I am indifferent.  My mission is to take the smallest loss possible.

This experience reminds me of Eddie Murphy’s character in “Bowfinger”, a paranoid, delusional basket case of psychological problems.   His mantra to avoid a mental breakdown is “Keep it together.  Keep it together.  Keep it together.”  And as a trader so must you.  Don’t panic.  Take the smallest loss possible and get on with your trading day.  There is a chop right around the corner.

Best of luck with your trading! Don’t forget to follow us on Twitter!

After I leave the office Friday around 7PM I generally grab some dinner (last night at Pomodoro on the UWS….delicious!) and then shut things down for the day.  So I missed an important email sent to me last night.  An email that a new and developing trader can learn from.  One that we should all write to someone who we consider a mentor.  Let’s discuss.

This email is an example of the little things that people must do to be a successful trader. Yesterday we were interviewing Connor, one of our better traders, for a video blog series we are creating.  We will ask questions of some of our traders and then release the video for our blog audience to learn from.

Question: Connor, what is most important for a new trader when they begin?

Connor: To learn the basics………

Connor explained that you can’t skip steps in the learning process.  It is brick by brick.

I meet too many transitioning professionals, developing and new traders, who think trading is about making calls, loading up, and “holding like a man”.  This is straight from fantasy trading land.  Trading is like building a brick house.  It is brick by brick.  And then sometimes even after you have built a house, you have to tear down the home and build a new one (develop a new trading system).  Or build a significant extension to your existing house (add new trading setups to your quiver).  But to do this you must develop the skills to be able to build this house, rebuild a new one, or significantly alter your existing home.  Skills such as thoughtfully and constructively reviewing your work.

And this email that I received is a first step, the first brick, for this young trader/author on building his house, his trading system.  This young trader who after his third day live, spent his Friday evening, reviewing his trading in great detail.  His email shows thoughtfulness, a passion for trading, an ability to admit mistakes, a desire to get better everyday, a realistic understanding of his learning curve, and pretty good writing skills (ok this last thing is not determinative of your chance of success as a trader but will earn points with this mentor).  His email is drunk with all of the little things.

I will share this email.  But after you read it, ask yourself if this is the kind of work that you do.  And if you are underperforming as a trader, the reason is simple.  You are not doing the work necessary like this young trader just did.

Hey Mike, I was thinking some more about the MOS trade this evening and I just wanted to share one other thing that I think caused me to rip up some money.

When the stock dropped I think I got into the mind set of trying to scalp money off the trade. I was sweeping in and out of the stock trying to catch a quick .20 or .30 or even more. I got greedy trying to get this “easy money” that was actually probably the hardest to make of all my trades today. What made me money earlier in the day was staying disciplined and being patient. I waited for good set ups, I looked for the good levels and I traded off of them. Only once or twice did I not hit out when a stock went against me, and other than that I thought I was trading very well. However, that MOS simply came down to greed or perhaps over-confidence with how I had been trading. I ignored the fundamentals of making good trades and was more or less gambling, and that’s how I ripped up the money. I don’t think I can read the tape well enough nor am I fast enough to get in and out of a stock moving as quickly as MOS was moving. I think this is what I meant when I said it was a hard stock too. While the programs and set ups were acting a little crazy, I simply think my skills aren’t developed enough to really trade MOS, EXCEPT for the plays you mentioned. Those set ups were relatively clear and slow around those levels. That .75 held well and for a while, there was clear buying at 49. These really are the only plays that I should have been playing and they are the only ones where my lack of speed and tape reading skills wouldn’t hinder my ability to make a good trade. All in all, I learned a lot today, I thought I traded well all day, for very specific reasons (Discipline, patience, levels, “the fundamentals”) and I ripped up money because I got greedy with finding a situation where I thought I could make an “easy” chop… instead I made a lot of very easy rips.

That having been said, I feel like I improved today. Not only because I improved on my mistakes from Thursdays trading session, but also because I learned a lot with this MOS breaking news play. I am glad I got to learn this lesson so early in my trading career when I was still trading with a small amount of size. I am going to make $100 dollars on Monday, I promise you that. I actually have a feeling that I won’t be the only one either. But I know what I need to do to get there and I’m going to execute well. Have a good weekend and I will see you on Monday!

He has placed his first brick, an ability to review his work.

Enjoy your weekend. Don’t forget to follow us on Twitter!

A few points…..

1) Today SMB tweeted:

Best Morning Idea: Buy $GS @ 150.60-150.90, TGT: high 150s#mktabout 9 hours ago from Twitterlicious

That was all GMan.  We were asked a follow up question as to how we picked that level, which I will share.  Yesterday GS could not hold above 150.50.  Also on the longer term chart 150.50 has been a level.  So this AM after GS gapped up we used the previous resistance as support. That is how we determined this level.  I am still long GS as I write.

2) We could not clear S&PF 930.  This is the level of most importance for us tomorrow.  If the market clears this level we will look for follow through to the upside.  If not then we will find some market stocks to trade on the short side and hold until the intraday downtrend is broken.  We will let the market dictate our trades.  We will be prepared whether the market trades above or below this important resistance level.

3) Two of our traders got ripped shorting FAZ into the close today.  That was a strange move.  And I like these shorts.  The trend for FAZ was down.  And they were following the clear trend.

Two points here however.  Anything can happen in the last five minutes.  Do not put yourself in a position to give back your entire day in five irrational minutes, or one crazy move.  And understand that the chances of FAZ breaking down below its lows were not likely since S&PF was at such important resistance of 930.

4) It is easy to play Wednesday evening quarterback and point out the points above that these two traders should have considered.  Trading is difficult.  And sometimes you just do not consider all of the things that you should.   If this is the case, do not be so hard on yourself.  I certainly did not learn not to let a crazy five minutes ruin my day until I let this happen to me a few times.

Your goal everyday is to learn.  Your goal is to get better.  Use this crazy FAZ move as a learning experience.

Best of luck with your trading! Don’t forget to follow us on Twitter!

Internally SMB  shares intraday alerts for all major intraday levels that our desk discovers.  Our desk is taught to share important intraday levels verbally through our audio feeds.   None of this works without trading skills.  None of this works without the trader sticking with a trade.  Let’s discuss.

Today I was trading OSIP.  It was In Play, had gapped up, and was holding at these elevated prices.  But 30.40 became significant intraday resistance.  30.40 would just not lift the offer.  30.40 offer was immovable.  And I shared this resistance level with the desk.  First we were short.  But then after OSIP was not trading much lower after meeting this substantial intraday resistance level, it appeared likely that the level would be violated.  We stayed short but ready to cover and flip above 30.40.

Finally 30.40 lifted and I covered and flipped.  OSIP traded up about 15c but then traded lower than 30.33.  This was not what we were looking for.  Some may have bought 47c, watched the stock trade higher, and then exited when OSIP traded below 40c.  Some may have bought even higher and hit a little lower.  Some may have taken an initial rip after this level, 30.40, was violated.

Look, anyone can buy a stock when it violates a resistance level and profit if it explodes.  And there will be trades when a stock breaches a resistance level, you get long, and the stock explodes.  Chop!  But these will be your best trades.  What about the good trades, the mediocre trades, the poor trades, the difficult trades, etc.  What about them?  Can you handle those?  Or will you carp about how the stock did not immediately explode above the level?  Will you join the ranks of the lesser trader?

Because the lesser trader thinks that trading is just about finding levels, taking positions, and making serious bank.  This is not the market I have traded for the past twelve years.  But the market is fair to those with trading skills.  And there is serious bank for those who develop trading skills.  And one is to stick with a stock.  And OSIP today is the perfect example.

So when OSIP initially failed to break out above 40c I took a small rip.  But I stayed with the stock.  The 40c resistance level was replaced with the 50c resistance level.  Greaaaaaat!  But I remained patient.  I waited for OSIP to hold above 50c which btw took a few more fake breakouts above 50c.  But finally OSIP held above 50c, made an impressive upmove to 77c, and never broke its intraday uptrend till very late in the day.  Finally we caught a decent upmove.

The lesser trader exits after the initial failed breakout and moves on.  The lesser trader does not stick with their stocks.  The lesser trader learns a level and can only trade the stock if it acts exactly how they have decided it should.  But that isn’t the trading that I know.

Levels are not helpful unless you learn how to trade.  These levels are invaluable only for those with trading skills.

Best of luck with your trading! Don’t forget to follow us on Twitter!