6 Essential Trading Lessons From Top Traders You Need To Learn

In this video learn 6 essential trading lessons from top traders, that you need to learn. Dr. Brett Steenbarger, renowned trading coach, and Mike Bellafiore, SMB Capital co-founder, teach you these 6 crucial lessons from elite traders so you can dramatically improve as a trader.
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in this video learn six essential
trading lessons from top traders that
you need to learn hi I’m Mike Bellafiore
co-founder of SMB capital a proprietary
trading firm located in midtown
Manhattan and I’m also the author of the
trading classic one good trade and the
playbook dr. Brett Steenbarger our
renowned trading coach and I teach you
these six crucial lessons from elite
traders so you can dramatically improve
as a trader
thank you very much for having us we are
looking forward to sharing ideas with
you about successful trading Mike
Bellafiore and I work with traders
professional traders at a firm called
SMB Capital what is unique about SMB is
that we teach traders how to become
successful professional traders so we
teach from the very beginning and we
coach them I’m a psychologist by
profession we mentor them Mike and Steve
do much of the mentoring we help those
traders grow to be successful in today’s
presentation we are sharing with you
some lessons that we have learned from
the most successful traders at SMB these
are trader making hundreds of thousands
of dollars each year and in some cases
millions of dollars each year they’ve
been very successful we see what they do
every single day and we want to share
with you the lessons from their
successful training okay so let’s start
with lesson number one and like jump in
at any time obviously lesson number one
is the importance of keeping score now
what we mean by that is that you track
the profits and losses of all of the
trades you place
and you keep records so that you can see
which trains are successful and which
trains are not an SMB say platform a
program called traitor view that is a
database of all of the trains that each
trade places so we can identify how many
winning trades and losing trains there
are identify how much people make in
their trains how much they losing trades
we can track the types of trains ones
are more successful we also track this
is coming from as a function of time of
day sometimes people make money during
one part of the day and not during other
parts of the day so we are able to
examine patterns of success and the
problems that traders have so that we
can quickly identify what they’re doing
well what needs improve and we can help
that learning process so let me offer an
example from our desk and with somebody
that we work with that dr. Steenbarger
and I work with and this is a picture of
swang and this is a picture of swang
receiving his Blackshirt
you receive a black shirt you earn a
black shirt on our desk if you make two
million dollars net in P&L; for the year
that’s not over the course of your
career that is not before fees and and
expenses this is net and recently swang
experienced a rare
a rare draw down a rare bout of
inconsistency in his trading and we took
a look at the numbers he came in with as
dr. Steve Berger said his trader view
stats and he had many days in a row of
being inconsistent and negative which
was unusual and from looking at those
stats dr. Steenbarger are said to swang
don’t let your swing trading get in the
way of your swang trading he was taking
on new and newly additional risk on his
swing trading and getting away from what
he did well and what is so amazing but
yet so inspiring as you said dr. Steve
Berger is that this is somebody who is a
star trader but yet but yet when he
started to do something outside of his
unique strengths his results materially
changed and when he was pointed in the
right direction as to what his strengths
are by dr. steam Berger he got right
back into being that star traded he was
in fact he came into our monthly meeting
just the other day and was smiling
ear-to-ear about how he had just gone on
a wonderful hot streak and had made four
hundred and forty plus thousand dollars
in the last 30 or so calendar days when
focusing on him on swang being swaying
Mike if I could just jump in here
traders in the audience this is so
important what mike is telling
when we keep score and track our winning
trades or losing trades what we find out
is our strengths we find out what we are
good at as traders and the goal of
becoming successful is to do more and
more of the things that we are good at
as soon as we try to be someone
different as soon as we get away from
our strengths the best of us like swang
become unsuccessful we can only be
successful by being better versions of
ourselves we cannot be successful by
imitating someone else are trying to be
someone different
my side ended up very happy at the end
of the month he had gotten back to who
he really another trader that we work
with at the firm when he first started
getting good asked to talk to our floor
manager and myself about receiving
additional capital for a particular type
of strategy and I asked our floor
manager to chat with the trader about
the topic so that I’m prepared and so I
knew before the meeting that the trader
was going to ask for more capital for a
very specific type of trading and before
the meeting I have to admit between us I
was not particularly excited about
having this meeting and having this
discussion on capital on a strategy that
I didn’t hold in very high regard I
didn’t think it’s this particular
strategy was something
you really could build a career around I
was skeptical that this trader should be
spending so much time and energy on this
one particular type of strategy and so
what did that trader do well he came in
with his trader view stats and he kept a
meticulous stats for this one particular
strategy and he dumped it on our
conference table in our conference room
in New York City and showed us his
results and his results were phenomenal
his equity curve as we say was straight
up all he did in the strategy was make
money and it was clear to our floor
manager and to myself as to the
management decision that we needed to
make next which is absolutely we’re
gonna give you more buying power for
this particular strategy but think of
yourself the way that I am thinking
about managing somebody like this trader
would would would I give this trader
more capital without seeing really good
results no I would not our firm would
not should you give yourself more
capital more risk on trades until until
until you have proven proven proven that
you can trade these strategies
profitably in real time you should not
and so just like we do at our firm prove
to yourself you can make money in a
strategy measure measure measure the
types of strategies you’re trading and
then and only then give yourself more
risk for those strategies super-quick my
great great point we have to earn the
right to grow our trading and that’s
what keeping statistics and measuring
helps us if you want to learn three will
setups that our traders use including
the simple setup that we teach all of
our new traders and the set up that
turned one of our traders into a
seven-figure big money earner check out
the free webinar that we’re currently
running just go ahead and click the link
that should be appearing right now at
the top right hand corner of your screen
that’s gonna open up this free
registration page in the new window so
don’t worry you’re not going to lose
this video you’re gonna learn more in a
couple of hours from this trading
workshop then from years of online
education now the next lesson is turning
our goals into plans when we review our
trading at the end of the day at the end
of the week or month we’re trying to
identify where we can make improvements
we’re also identifying what we did well
during that week or during that month
that we want to keep doing and we turn
those into goals look for ways we could
improve in our trading
and that becomes a goal for the next
week or for the next month
but the goal does not have power until
we turn it into a concrete specific plan
so it’s not enough to say oh I need to
manage my risk better to control my
losses better that’s not enough we need
a plan that tells us how are we going to
do that what specifically are we going
to do we are controlling our losses into
a plan it becomes alive for us work that
plan our performance review true
performance learning dr. Steenbarger
works with some of the biggest
institutional hedge funds Big Money
traders teams of traders in the world
and on a much much much smaller scale
one of the things that I felt personally
that I did well in 2018 was to become
open minded to coaching a select number
of very elite traders outside of my firm
we have lots to do at our firm here we
have lots of great traders here but I
wanted personally to grow as a managing
partner as a coach as a trader and so I
started to work one-on-one with these
elite traders and there’s something that
became very clear to me getting a look
at the traders that are elite at SMB and
then the traders that are elite outside
the firm trading different products
trading different types of markets and
so one of the trader
this picture on the right is Austin
Mitchum
we call him Slayer that is the nickname
that we’ve given him and he’s a he’s a
terrific Australian equities trader a
market that has nowhere near the
opportunity that the US markets has and
he works at a hedge fund slash prop firm
in Sydney Australia and and I’ve had the
good fortune to visit him on his trading
desk and work with him on a daily basis
and one of the things that’s just so
clear to me when you work with these
elite traders is that they’re different
and they’re different in a very specific
way they’re different in that when you
give them something to work on when they
identify an area that they want to work
on an area that they want to get better
at a goal that they want to turn into a
plan that they don’t just sit around and
talk about hey how I would like to
improve my stock selection I would like
to stop trading stocks I should not be
trading they immediately and with
specificity and with intensity draw up a
specific plan as to how they’re going to
go about doing that tomorrow
whereas underperforming traders
unfortunately and I see this
particularly in our monthly reviews or
when I’m at an event talking with
independent retail traders
underperforming traders talk more
generally they say well I want to they
say I need to get better at stock
selection they say I really need to stop
trading these types of stocks and then
they kind of stop talking and they move
on to the next idea no no no no elite
traders are intense it bothers them to
there
whore that they are doing something like
trading stocks they shouldn’t be trading
or trading setups that are not their
strengths it bothers them to their core
it burns inside of them there’s
literally physical pain it you can hear
if you talk to them or see in their
emails that they’re not living up to
their standards and so as dr. Steenbarger
are saying identify your solutions but
then be specific about them and and and
start executing immediately if you want
to be like these elite guys just one
little added point to that mic what you
say is so true the really successful
trainers I identify by what they are
doing when the markets are not trading
when there’s no trading going on what
are they doing and the really good ones
are reviewing their training their
learning their networking with other
good traders they’re getting new ideas
they’re working on their game just like
an athlete when a game is not being
played what are they doing they’re
practicing their work out they’re doing
drills
that’s what successful trainers okay
number 3s is our focus we focus on
process we don’t just focus on profits
and loss common ingredient among
successful traders is that they develop
many processes many routines for doing
what they do well they have a process
ideas in markets they have a process for
figuring out how to turn those ideas
into tre
that have a good risk reward they have a
process for sizing their positions and
managing risk and they have a process
for their trading very consistent
consistent processes
now as Mike can share successful traders
not only have trading processes they
have personal processes in other words
they have routines for running their
personal lives and some of those
routines involve getting good sleep
good exercise joining their life outside
of training all of these things focused
and at their peak during their trading
so our time outside of training is
important have that in a process fashion
it’s our trading so this is shark and
this is shark receiving his Blackshirt
last year and shark we’ve been very
fortunate to work with and we’ve been
very fortunate that some of the people
that have applied and trained at our
firm at a college or super talented
people and in this case not just a super
talented individual but but even a
better person and everybody wants to
learn more about shark for those who
follow SMB so I’ll tell you a little bit
more about shark and I will hint to you
that while you get a black shirt for
netting over two million dollars we
probably should have another shirt for
maybe swang and shark because they
made much more than that but one of the
things about shark and in working with
shark stands out to me so clearly and
I’ll just sort of take a half a step
back
and set the context for it so at the end
of the year we challenge our traders to
create a yearly goal to create yearly
goals for themselves in their trading
and then they present them to dr.
Steenbarger and myself and our floor
manager and we meet in our conference
room
talk about the early goals that they’ve
mapped out for themselves and they do it
in front of their teams I do it in front
of the junior traders in this case four
sharks since he’s a senior trader and so
everybody puts it out there what they’re
working on what their goals are what
they hope to accomplish and so sharks
sent over his yearly goals after a
particularly good year and when I read
what he wrote it just stopped me in my
tracks and he said and my goal is to
make eight figures in the future that’s
north of ten million dollars and that
that figure stopped me in my tracks
but then what came next did as well and
and it’s and it was the more important
thought which is he didn’t just say I
want to make ten million dollars in a
particular trading year he then started
to lay out the path the track that was
going to get him there the things that
he needed to do even being such an elite
trader that was going to put him in a
position to be able to accomplish to
accomplish that goal and so in the
takeaway from somebody like shark is
that here is somebody who after an
amazing year is not satisfied and he is
pushing himself to do better and he is
specifically pointing out the things
that he can do better at that’s gonna
help him to get to that next level so
whatever level you’re at if you’re
somebody who’s not even consistently
profitable yet what are the things that
you can do to help you to improve if you
are consistently profitable if you’re
making a hundred dollars a day
and that’s terrific how do you get to
the point where you’re able to make you
know more than that if you can make
$5,000 in a month how can you get to the
point where you can make $10,000 in a
month and I can tell you that shark and
swang used to make consistently four to
$8,000 a month
after a period of time that it took them
to get good and then they set new goals
and so think about think about what you
can do specifically and your trading to
take those next steps
my kind jump in here again a really good
point they are the successful trainers
are competing against themselves they’re
not competing against the market they’re
surely not competing against other
people they are trying to improve their
performance day over day week after week
month after month year after year
they’re competing to be better and
better against their past and that’s
what moves them forward I’ll invite all
of you to go to our YouTube channel at
the bottom of the slide is the link to
get there you can just go to youtube and
type in SMB capital and on this point
about the importance of process we share
a video for the trading community about
20 habits that are essential to become a
highly profitable trader it is a
template that you can take a look at in
this video and perhaps use for you
putting in a routine you putting in a
process for you to take that next step
in your trading it’s not meant to be the
things that you definitely all should do
these are ideas that are there for you
to consider many of these things we do
use on the desk but I think the best way
to go about it
to watch the video check out our ideas
and then for you and this is my
challenge to all of you listening and
watching for you to come up with your
own routine what are the things that
you’re gonna do every day that you’re
going to commit to that’s gonna help you
get better as a trader and that can’t be
just turning on your screens and trading
live that’s not how these guys become
great it has to be as dr. Steenbarger
said what are the things you’re doing
after and before markets what are the
things you’re what are some of the
things you’re doing in real time but
create that path those best practices
that you can turn into habit that will
drive that will drive your success that
will drive your improvement okay Oh pick
it up Mike because we want to leave some
time for questions answers next lesson
is sustaining our focus our attention as
we know training can influence our
emotions there’s risk in training
uncertainty in training and it’s easy
for us to get into a stress response a
flight-or-fight where we become anxious
we become frustrated and those emotions
can interfere with our decision-making
what we have found with the top traders
is that they know themselves they know
when they’re becoming frustrated
becoming bored and they are able to step
away from trading temporarily to regain
their focus sometimes they do meditation
with something like the headspace app
sometimes they do physical exercise
sometimes they just splash cold water on
their face and get away from the screens
but the idea is that the priority for
the successful trader is not trading a
priority is having a good focus having
sustained attention so that they can
make the best decisions possible dr.
Steenbarger I actually think this is some
of your best work of late we sit around
people like myself sit around and try
and think about how to help traders
improve because we’re running a P
proprietary trading firm here and our
primary business is if our traders are
not making money then we’re not making
money and and potentially worse and so
you make this just a stood point and
focus on the idea of you know it’s not
about necessarily passion it’s not
necessarily about the number of hours
you’re working it’s specifically about
focus that leads to success and I find
that to be so I find the way that you
shaped that idea to be much more
sophisticated and helpful than a lot of
the stuff we’ve we’ve read in the past
well thank you thank you and certainly
on my blog the trader feed blog spot.com
there are a number of sir sizes the
traders can learn from to improve their
focus the next lesson is teamwork
teamwork makes the dream work and what
we mean by teamwork is teaming up with
other traders it might be at a trading
firm like SMB on the trading floor
it might be online with people that you
have things in common with but you are
reaching out to others and you are
supporting each other you’re learning
with each other you’re learning from
each other and that teamwork accelerates
the learning curve when you are learning
your lessons but also sharing in other
people’s lessons you’re learning doubles
and triples and that’s what we find on
the trading floor an SMB traders are
organized in teams
and the young traders learn from the
experienced traders and everyone learns
by sharing their ideas out loud I’ll
share this quick anecdote that you were
involved with dr. Steenbarger on our
desk and so there is a terrific team
leader who runs a terrific team all the
traders on this team are making the most
progress at the firm the team overall is
surpassing the performance of all the
other teams and there were a couple of
players on the team who I had some
strong words for who were not fully
cooperating communicating collaborating
with this particular team and I said to
them you have this incredibly diligent
succeeding team leader with junior guys
in the team all making tremendous
progress more progress than anyone else
at the firm and yet that the two of you
have this incredible opportunity to tap
into this team this team leader and
you’re not taking full advantage of it
and I just don’t understand that I don’t
understand how you could let that
opportunity slip away if for me I would
be sitting right next to that team
leader and be involved in every
conversation that team was having and if
they got up and went to lunch I’d follow
them
in fact if they’ve got up and went to
the bathroom I’d follow them too I’d
want to be involved in more and I hate
it when you follow me in the bathroom
ugh so we you know and and I have to
admit it between between us friends I
have to admit that I said it right there
and recap very differently than I
actually said it live as dr. Steenbarger
can attest to yes and it’s
because the traders at our firm who are
doing the best are doing it class
operating in teams this is both true as
discretionary traders this is also true
on the automated trading side even the
automated traders who are doing the best
at our firm are doing it in teams by
collaborating last lesson so crawl walk
run what that means is when you are
starting out as a trader or as slowly
and small as possible so for instance
the traders on the SMB floor start their
trading simulation mode they trade real
stocks in real time and their score but
they’re not putting any money at risk
they are simulated trades their practice
trades only when they do well in the
practice training to trade a small
amount of money and then as they well
with a small amount they grow and so
they crush crawl then they walk and
eventually they get quite a bit of money
and that’s when they run the whole idea
here is that you want to make all of
your mistakes as a trader when you are
trading smallest you want to protect
your capital protect your money during
your learning curve so that once you are
trading well that’s when you can take
more risk and make more money I’ll just
mention one other quick idea and this is
very important and Mike can certainly
speak to this what I find in that crawl
walk run process is that people not only
learn how they trade well they work what
to trade it turns out that what people
trade
is just as important how they trade some
things are moving more than other things
SMB and identifying what we call stocks
in play and taking advantage of their in
fact a certain person I know has a book
called the playbook that describes how
that is done a Mike’s book is very
helpful in that way but that’s a big
part of crawl walk run it’s not just
learning how to put on trades but
learning what to trade I’ll supplement
we said with two thoughts when the stage
are in there’s different stages that
you’re going to be in as a trader focus
on doing what’s necessary to succeed in
that stage at our firm there’s a
foundational stage so our traders take
SMB DNA and then they take s and be the
winning trader when that stage be the
best student in SMB DNA then there’s a
sampling stage where you’re trying
different types of setups and trying to
find your unique niche for instance
swang if you asked him or made him trade
like shark would do very poorly shark if
you made him trade like swang would do
very poorly they both have unique
cognitive and personality traits that
they want to tap into
then there’s the adoption of technology
we have great technology at our firm
filtering scripting automated trading
traders have to get their feet wet with
technology then traders are trying to
become a consistently profitable trader
and so the first book I wrote is one
good trade
we call that being a CPT but you’re
trying to be consistent with your
trading and so when I when I say win the
stage before you become a consistently
profitable trader you should not be
trying to be a really big trader you
should not be trying to put on a lot of
size with a particular trade that’s the
next step sizing is that next stage and
then the next step after that is breath
so you know we had a conversation
actually dr. Steinberg was somebody
who’s super talented who were a little
bit confused about why he’s not doing as
well as he should and he’s he’s really
not yet consistently profitable and what
he’s doing is he is trying to win the
stage of breath he’s trying to do too
much stuff when he should be focusing on
the three trades that he’s best at or
the four trades that you’re best at as
opposed to 15 different types of setups
that all that’s happening there is he’s
just figuring out how bad he is as a
trader when he tries to do to month to
do too much and then there’s advance
breath you want to win each of those
stages I am going to take an educated
guess that there are a lot of traders in
the room who are developing traders and
what we have seen over the course of the
years with developing traders is that
they may not be as good as they want to
be yet they may not be like a shark yet
but remember shark and swang when they
first started started as people in our
training class they started going
through our foundation they started
going through SMB foundation and when
they started live they didn’t make money
right away and in fact it took them you
know a good nine months before they even
became consistently profitable and then
when they were consistently profitable
they were making just
little bit of money and then even when
they were you know kind of good yeah
they were still making eight to ten
thousand dollars a month and then from
there they were working on building that
up and so my point is this whole game is
a process and if you’re not where you
want to be at the moment focus on not
being discouraged by that but understand
that is part of this whole process
you’re not there yet
you’re not a star trader yet but if you
keep working if you put that process in
place if you find your niche like swang
has like shark has– if you put in a
really good process if you put best
practices turn them into habit and are
consistent with your execution you’re
around people that care about you and
that support you and and and and that
can help you and there are people that
have gone on to have just extraordinary
careers so not yet
I might just want little addition to
that you’re so right
sometimes you have to try many different
styles of training and you have to try
trading different kinds of things before
you can see what you are good at and
that’s where the practice trading is so
important you try different styles it’s
just like sports you could be very good
at one sport and not very good at
another one you could be very good at
one type of trading and not good at
other styles you want to discover what
you are good at and that often means
trying different things I want to wish
you a lot of luck in your trading and in
your development and it’s been an honor
and a pleasure to be able to speak with
you so now it’s your turn
which effective trading technique
discussed in this video are you going to
implement
you’re trading are you going to keep
score of your trading or are you going
to turn goals into plans or perhaps
there’s something else that you learn
from this video that you’re going to add
to your trading let us know by leaving a
comment below right now

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