BellaMike Bellafiore's (Bella's) Blogs4 Comments

I know of no more encouraging fact than the unquestioned ability of a man to elevate his life by conscious endeavor. — Henry David Thoreau

Our June class will go live on Tuesday. Home of an interesting cast of characters like: 100 Push Ups, Everyone’s Best Friend, Iron Mike Mike, Trend Line, the Air Canada boys featuring 1000 Questions, The Staten Island Serial Dater, Hop Along, Casanova, and many others. Should we make them all stand in front of the room and declare they are going pro? At this time I would like to announce that I will give up my remaining eligibility and turn pro with SMB. Tuesday will be an exciting day for the lucky 13. No one was fired during our nine weeks of training. Disappointing. No one quit. More disappointing? Now they move to Trader Development for the next four months, live trading, immersed in their opportunity of a lifetime.

Some in the June class will join the ranks of These Guys are Good in One Good Trade. Potentially others will walk the plank of Why Traders Fail. We will monitor the actions of all so the latter is avoided. While trading is the most difficult thing that most will attempt in their lives placing yourself in the best position to succeed is entirely up to the trader. Thousands of emails, too many phone conversations, years of training new traders has created a list of do’s and don’ts for the new trader when going live.

1) You do not learn how to make $5000 in a day by losing $5000. Losing $5000 teaches you how to lose $5000. First learn how to not lose money, then making a small amount, then a little more, then a little more, then more…….

2) The first day you trade live will be the worst you ever are as a professional trader. We are not good at anything until we put in our hours. For trading this means thousands of hours of screen time. Trade with very little size. Why risk money when this is the worst you will ever be?

3) The most important thing you can do as you begin your trading career is to improve every day. Turn one day into ten days of experience, one trade into ten trades of experience through simulation.

4) Develop a list of the things that anger you while trading. Perform visualization exercises to combat trading on tilt intraday.

5) Develop a tight intraday stop loss. Follow it.

6) Stick with a few stocks. On our desk we do not allow any new trader to trade more than five stocks when they first trade live. Don’t prove how badly you can trade too many stocks. Work on your trading skills by focusing on just a few.

7) Develop good habits. It’s the thousand little things you do consistently well that will determine your success. Prepare properly, keep a detailed journal, talk trading, etc.

8) Find a good mentor. We get better by receiving critical feedback. Acquiring domain knowledge, motivation, critical feedback, and simulation is the process for all great performers to turn knowledge into elite performance (See The Talent Code: Greatness Isn’t Born. It’s Grown. Here’s How.)

9) Set process goals. Your job is not to make money but to improve everyday.

10) What is your ultimate goal? To make millions? Freedom? Date a model? Buy a Ferrari? You will never reach these goals unless you do not embrace the life philosophy of becoming an elite performer. And in this world money is not your greatest reward.

For those who are going live from day one you can start making money if you are realistic about your start. JToma, CNBC contributor, and Senior Trader at SMB, gives the best opening speech to our young guys. Let me give it a try.

In your life you get very few opportunities to do something great. This is one such opportunity. Most in the world are in dead end jobs. This is never one of those jobs. In One Good Trade (Wiley Trading) I created a fictional character in Why Traders Fail who enters the game of trading for the coolness of it all. This character daydreams telling a young lady what he does and her disinterest instantly turning to total interest. Let me be clear, this is exactly what will happen. Other than playing CF for the New York Yankees or being a rock star nothing is cooler than being a professional trader. You will learn more about yourself in a year of trading than working for twenty years at a never-challenge-me corporation. Learning to successfully navigate the markets is the Mount Everett of your professional life. Focus on your skill development and improving everyday and you will learn how good you can be as a trader. You were chosen from a very large pool of applicants. You have everything you need to succeed. Prop trading is the best job in the world! If you ever have a question please just ask. Go become the next great trader on the Street!

Mike Bellafiore
Author, One Good Trade

4 Comments on “3…2…1…Live”

  1. I disagree somewhat with your point. It completely depends on a person’s response. Losing money can be highly instructive if a person is willing to admit mistakes and learn from them. Succeeding in markets is largely a matter of controlling risk and avoiding mistakes, and sometimes getting clobbered is the best way to learn how not to get clobbered in the future. Of course, if someone refuses to recognize their errors and adjust – and this usually comes from thinking of losses as “bad luck” rather than “bad execution” – then losing money is definitely not helpful.

    I was recently reading an old copy of Market Wizards and I was struck by how many of the interviewees had suffered catastrophic losses early in their careers. These episodes often served as the catalyst for their transformation from loser to wizard. Clearly, those early mistakes taught them something valuable.

  2. Great response!

    You learn from losses. You do not have to from massive losses. Small losses can teach you the same lessons.

    Most traders become better by building on their strengths. Finding what works for them and trading those set ups more often and with more size. It is a progression to learn to trade big and control your risk. And losing big is not necessary to learn to trade big. Since most don’t have massive capital behind them like at a Hedge Fund or bigger prop firm they have no choice but to start by limiting their losses.

    Thxs for weighing in with your opinion. Great stuff!

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