This Trader Is Delusional!

Jan 13th, 2013 | By | Category: Mike Bellafiore's (Bella's) Blogs
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On Sundays some SMB Traders send me their weekly results.  Here is an example from one trader, who I like a lot and am rooting for, that p***** me off.

This week could have big a big week for me and one that has really set in on me bc I lost
$1,000 and I wanted to know what happened after all the preparation that I took. If I took
trades that conformed to my edge, added to trades that were working, and let my winning
trades play out: I would have had my best week to date and that is really interesting. Two
days would have been over $1,000 and the rest around breakeven. going over my trades, it
really is amazing how many trades I took that didn’t conform to my strategy. I think that I
went on tilt after losing Money on Monday when I had 3 trades that I put myself in a position
to make real money and I didn’t take the AAPL trade in premarket. I tried to compensate for
this by getting in trades that were not My own and I will definitely be looking to improve on
this this week. I now realize that I cannot try to make money, all I have to do is follow my
strategy and the trades that work are the trades that I look at right away and say to myself “I
HAVE to be in this” not the trades that I think “might” work and I try to anticipate and ignore
my signals

● I will be a consistently profitable trader if:

1) I only take trades that I have an edge in

2) I let my winning trades play out and tell me when to exit

@mikebellafiore

The trader above is delusional!  I write about this issue more extensively in my next book, The PlayBook.  He is not anywhere near close to having a big week.  Traders do not go from underperforming to a big week, unless they are lucky.  Trading is a measurement of doing all the little things well.  This trader is making four big mistakes that he must correct just to get flat.  Flat should be his singular goal because he is underperforming.

Here are his next steps:

1. Not so drastically underperform

2. Flat

3. Make a little

4. Expand his PlayBook

5. Get big in his A+ setups

There are five steps before he will have a big week, not only if he did a few things differently.

To achieve Goal 1 he must address these problems:

it really is amazing how many trades I took that didn’t conform to my strategy

You do not just decide to solve this problem.  This is an issue of preparation, visualization and trade review.  All of these are lacking based on the statement above.

went on tilt

You cannot just change going on tilt.  You have to work to lessen the frequency and damage of these periods.  Self-actualization, a psychological journal, and a walk to calm down in real-time when you sense you are on tilt are essential.

I didn’t take the AAPL trade

Again you are not just going to take the next such trade.  Pulling the trigger is performance anxiety.  Generally it results from a lack of practice with your best set ups.  Think trading, talk trading, review, talk to your mentor, watch tape, create a PlayBook, etc are all ways to help you execute on your favorite setups in real-time.

I tried to compensate

This trader is going on the demo next week.  He can work on not doing this while not trading our money.

Mike Bellafiore

One Good Trade

no relevant positions

  • andrew ramponi

    I spent a long long time writing similarly delusional rubbish in my journal. It’s comforting stuff until someone who knows what they are talking about reads it.

  • alan

    Great post. This trader should thank his lucky stars that he has access to such fantastic critical feedback. Amazing stuff.