A ? 4 the Trading Community- Specialize or Well-Rounded

BellaGeneral Comments, Mike Bellafiore's (Bella's) Blogs8 Comments

Dr. Steenbarger helped SMB recognize one of the improvements we could make at our firm awhile ago. The partners and Senior Traders must be responsible for a great deal of teaching and mentoring. But if traders are not leveraging the talent of all firm members then that firm is not offering the best learning environment. Traders learn from other traders and not just partners and senior traders.


The SMB Blog should not just be everything that Steve or GMan or Adam or I have learned. It should advocate a learning community so much more than just us. We are just four guys with four sets of learning experiences, granted some of us have been trading for a long time. But our daily community is so much larger. In the past I have asked for input from our readers. Today for this new series to our blog we ask for help from our trading community. We ask for your input and ideas. Please read the question posed by Reader John and offer your thoughts.


Great post.

This is query is unrelated to the this post directly.

I believe in learning one successful setup and becoming the very best in executing on any one setup. As you grow you increase size on this one setup NOT go off and try to become an expert in five or ten different setups and have marginal or no success in all 10 or 5 or whatever number.

It seems you guys push your traders to become experts in many many setups from trading the open to News events, to reading T/sales and level 2 to many others. It seems this volume of setups a new trader must learn with you guys could be stifling. Why not have them spend one or two years on just one setup only. This will breed an expert in one domain and confidence as well.

There are futures/forex traders who make huge careers on this one-setup method and not try to become a genius in all?

Do you agree – am I off base? This is just an observation from watching various videos and blog tutorials from SMB? At the end of the day, you guys obviously have success so if it ain’t broke…. but the one setup only method helped me filter out so much noise and just trade MY setup and not worry about anything else.

Great work and thanks,


8 Comments on “A ? 4 the Trading Community- Specialize or Well-Rounded”

  1. John..I think when Bella speaks of the different setups that one must master to become an elite performer, he is talking about specific & basic chart setups i.e is it a high consolidation, an opening range play, a breakaway gap, a fresh news play, a earnings play, a breakout, a breakout failure..the list goes on and on..Every trader must be able to read the tape, and use the level 2/T&S as you mentioned, and base their trading decisions on a number of elements i.e intraday fundamentals, different timeframes..I know Bella always is critical of those who say “all you need to learn is a few basic chart setups and you will be consistently profitable” – if only it were this easy! In order to be an elite performer, you can just rely on 1 setup because the market changes, and you have to adapt and find what works for you. Some chart setups work better in different market environments. For example, a setup that has been working great for me lately is stocks that gap up, hold and continue to trend higher for the rest of the day..Also, buying strong stocks into pullbacks has also been working (for ME). I would consider these to be basic setups – but there are also subsets of these trades that get more complicated..If you are a new trader, there are some very basic setups that you need to learn and master before you can get into these subsets..Find what setups work for you and trade them with more size..Hope this helps!

  2. You have to be a well rounded trader in order to succeed and have a long lasting career in this business. If you are only good at trading 1 setup, what happens when the market changes and that setup no longer works? The setups that worked great last year may not work great this year..Gotta adapt!

  3. Thanks Dave.

    Yes, I agree with much of your comment.

    Nothing in trading comes easy.
    As I learned the hard way, the opportunities in the market are boundless and the ways and entries one can take are limitless. So, specialize. One must self impose boundries. For me, creating boundries on what I will participate in, and really applying discipline to what is working and not spend time on what is not working helped me advance.

    Like somebody said recently (might have been from SMB?) when you go deposit earnings from trading to your checking account – your account is not going to ask you how or what setups you used to gain those earnings. So, all that matters, are you working a process that pays or not.
    For me doing less, but better — is more, in this case. And ones P&L is the final arbiter really.

    I, for sure, am still learning and will always be learning in this game, just trying find my way to profits.

    Thanks for the feedback.


  4. I know a trader who trades one setup and scans stocks according to criteria that will do well with that setup. I know his setup and it would be totally boring to me to do the same simple setup everyday.

    I know another trader who will keep his setups to 10. If he wants to add a setup, then he’ll remove one.

    I never even considered limiting my setups but my brain can only remember so many details. So I probably limit the number I trade simply because I can’t remember all the details of entry rules and exits for too many.

    How would you count setups? I have about 6 different ways I trade double tops. So is that 1 setup or 6? I tend to count it as 3 — one in a downtrend and one in an uptrend and one in a trading range.

    I think each trader needs to find what suits his or her style and stick with that. Have enough to be consistently profitable under any market condition.

    I could never do what SMB traders do. I admire their fortitude. My style is different.

    I think you are right to emphasize mastering your setup(s). That is how you find all the nuances that Mike talks about. With SMB’s Secret Project X, they don’t need to take 2 years to master a setup. Wish we all had that!

  5. John. That is my line. When you go to cash your trading check at the bank they don’t ask you how you made it. They cash the check.

  6. Comparing a trader who does her work at home and traders who work for prop firms will problematic. One aspect of Bella’s trade of the week that resonates with me is when he says that they have tested the success rate of a particular trade and it has a highly probably winning rate (for them), but then he always adds, see if you can make this your own. And sometimes, I just can’t, so I continue with my stable of set-ups and that one is rejected.

    In other words, I am a moderate who knows that Bella and crew are prop traders and I am not so I broaden my base of set-ups as well as I can, but I certainly do not have the support system as they have, in terms of capital, in terms of fast trading connections, in terms of teamwork, etc. As Steenbarger has emphasized, know your niche. And traders who work on their own need to be more scrabbling and selective in their efforts than prop traders. For example, you got to be fast to take momentum plays especially when they occur in the first half an hour of trading. I still keep my eye out for them, because there are some that are slower and I can successfully take them. For example, I have noted that if the opening range is of a particular pattern, consisting of certain candles and volume and duration, my slower system will be able to make do, while others go happily by the wayside.

    Also traders at home have a different relationship with cash flow than prop traders. Prop traders have more pressure on them to mint the coin than a trader at home, who has very cheap overhead and we can limp along if need be.

    However, in general, I agree with Bella’s method, because it focuses on trading well and not just the setup, and to trade well you need to process information continually, you need to be flexible, because the market is in a state flux, and a bit of dogma on your part regarding your single security blanket set-up is not going to cut the mustard (well, not for long anyway). Good set-ups are part of trading well, but one set-up is not equivalent to trading well.

  7. You should become proficient in several setups for one main reason. Setups don’t always last forever. Things that can morph a setup? Volatility, extreme “fundamentals” shift in the security that you are trading, the herd is more aware of the setup etc. Adapting to shifting dynamics in the market prevents you from giving back the hard-earned gains.

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