Trading Off of Levels: How a Real Trader Works

BellaMike Bellafiore's (Bella's) BlogsLeave a Comment

There is this developing trader, who sends me a summary of his trading at the end of every week. I asked him to do this so I have data on whether we should hire him for the desk. He’s not quite ready but I love to see his progress. Mostly I want to see how he handles success and failure and how he rehearses, practices, and thinks about his craft. In short, mostly I want to learn if he fits our culture. Guys who do and who have a passion for trading are worth my time and capital.

The Financial Media Entertainment Complex paints a trading/investing game of picks and predictions. In the real trading world real traders struggle, lament, tweak, re-tweak, and search for improvement. The email below is one real trading review of a pretty good trader living the real life of a pro trader. The trader messes up trading off an important level just like we all do and then searches for improvement. (There will be no advertisements on Coke or Nike or GM trucks to follow.)

I would like to limber up and kick myself in the face with a golf shoe.

There are some silver linings, but what a waste of opportunity this week …

I feel like the concept of Testing Levels finally sunk in after I went back and looked over some screen caps from the last time Mark Minervini did a Webinar.

I also learned about a destructive a destructive psychological habit I have, and how to use my psychological journal effectively by missing the move on Friday. As Dr. Menaker suggests, by carefully studying my actual behavior and the mental states that I am in when those behaviors occur I can uncover some deep rooted, virtually automatic tendencies. It’s a jackass combination of getting bored and frustrated, then fixating on a fix, instead of just going back to what I already know. As if every small hiccup needs a novel solution. Part of that is being a fragile flower about losing because I felt like the market was coming after me. So I did the math: the market is over 1.3 billion times bigger than me.

On the way through 40 on Tuesday I got short based on multiple indications. I wrongly held without a stop because I also realized I’m having strategy confusion right now, too. It’s like I’m trying to straddle a fence between my prop setup and tape reading, and without using stops because my prop setup is based on positioning, but how are you going to be in position with 20 handles to the dome? I went back and read your post about hitting losers, but the real gem was Gman’s post on how he handled AIG. The genius of Gman’s post is how succinct it is. I can see what he’s talking about in the tape all the time, but it’s like I never trusted myself.

I had enough confidence to feel that I could get out of harm’s way, but that I was going to have to enjoy the axe doing it. I used the tape to cover in front of a level I would have preferred because the tape was enduring the volume. Sure enough, Spencer came on twitter a few minutes later and made that exact comment on Thursday afternoon.

It’s embarrassing to admit to having some of the same problems as I have been dealing with for months. Maybe it’s the concepts that weren’t sinking in? I don’t know, but once again, I have the weekend to look forward to thinking it through and trying to get better.

I keep feeling like “next week is the week I get out of my own way.”

To his email I responded:

Seems like a gr8 week. You learned so much. I love your analysis. There is a difference between being exposed to knowledge and internalizing that knowledge. You are in the process of turning exposure into internalization. You are getting closer. Trade well.
You can be better tomorrow than you are today!

Mike Bellafiore

The PlayBook

One Good Trade

no relevant positions

Leave a Reply