A Month of Trading Poorly is Too Long

A month of trading poorly is too long.

During our recent monthly trader reviews, we made this point to three separate traders, on 3 different teams, with 3 different levels of experience, 3 different trading styles, and after 3 different month’s of production.  You do not want to be at your trading station reviewing your month and grade yourself poorly for the entire month. All of your work during an entire month not paying dividends.  That is a terrible feeling for a trader.  This can all be avoided.

During one team meeting, a junior trader summarized his month of underperformance.  I contributed, “Can I jump in here?  For an active trader, 3 days of trading underperformance is time for a checkup.”  You might ask:

Am I trading the right stocks?

Am I taking the setups in my PlayBook?

Should I focus on different setups in my PlayBook for this month?

Has the market changed so that I need to adjust my trading?

Am I overtrading?

Think about it.  If you perform a checkup on your trading after every 3 days of underperformance, and there are an average of 21 trading days in a month, then this gives you 7 chances to fix your trading underperformance.  7 chances!  Most underperforming traders give themselves zero chances before the end of the month to fix their trading and then disappointedly acknowledge their poor trading end of month.

During our last team meeting, one trader announced 4 days of poor trading warranted a checkup.  There is no magic number, however there does need to be a time period for your trading when you implement a checkup.  And for swing traders, this trading might be longer than for active traders.

Does it make sense to spend all that time and effort trading for an entire month and not give yourself several chances to fix your poor trading, during a poor trading month?

What if your favorite baseball player went an entire month not hitting and you learned he did not make any adjustments?

What if you favorite NBA player went an entire month shooting poorly and you learned he did not make any changes?

You would think your favorite player is unprofessional.  You might think he doesn’t care.  That player might not remain your favorite player.

Do not be that trader who sits in their monthly review and laments an entire month of poor trading.  You are better than that!  You have chances to turn that period of poor trading around.  Be the trader who instead feels proud of a solid trading month, who overcame a few short periods of poor trading.  Be that trader.

Important disclosures

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