A Focus on Immediately Being in the Money Helped this Trader Improve

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I had a conversation with one of the traders on our desk end of month congratulating him on his improved performance and  inquiring on the reasons for it.

We sat in my office and I congratulated him on improving from consistently negative to flat for the month.   Come again Mike?  Why is that something for which to congratulate a trader?  I thought the purpose was to make money?

Those of you who read my blog are aware that I view consistently negative to flat as a significant step.  It is.  Most never get here (to flat for the month) as a trader.  Granted we want better than flat, but you rarely see a trader go from consistently unprofitable to consistently profitable without first showing they can be flat for the month.

So I asked the trader the reasons for his improvement.  He said something interesting that is contrary to what I hear from a majority of underperforming short term traders.

A common correction for the underperforming short term trader is to widen their stops.  You hear them say things like:

“If I just give my stocks more room I will start making money.”

“If I give my stocks the real stop, I will start making money.”

Maybe. In most cases…not, the reasons for consistently unprofitable span more than their stops or are not the result of their stops.  And this was not the case for this trader.

His improvement in his words came from focusing on and keeping only the positions that started working for him right away.  He felt he was giving his stocks too much room, that his stops were too big.  When he focused on setups where he would be in the money immediately his results improved.  He cut trades that did not start working for him quickly.  If he was not immediately sure the position would be a winner he exited, regrouped and started fresh.

For this trader, progress was spawned from being in the money faster, feeling less pain, and not giving stocks much of a stop.  Perhaps, this idea is something for some traders to consider for their trading.

Related posts:

A Trader’s Path from A-Z

A Path to Profitability


“You can be better tomorrow than you are today!”

Mike Bellafiore is the Co-Founder of SMB Capital and SMBU, which provides trading education in stocks and options. Bella is the author of One Good Trade and The PlayBook. He invites your questions at [email protected].


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