Give me your honest opinion (on my trading)

Mr.Bellafiore,

I have been trading for a year and a couple of months now. In April of last year I began trading with (redacted), I enjoy trading with them and have taken their …. course. as well as other courses within their offering. This has been valuable to my trading in Identifying the Fundamentals.

Recently, I began using Tradervue after reading your book The PlayBook and starting to develop a PlayBook, I feel like there are still some fundamentals missing, but I am slowly becoming profitable (I think March and April were really bad) but I have changed a few things, not over trading, looking for clean setups and trends and seeing a difference in my review of trades and immediately identifying trades that I should not be in or over trading.  

So my question here is I feel like I need to do one of two things, either get additional training or  just work on my seat time taking one good trade at a time. I am looking for an honest opinion here.

Bella responds

Ok my honest opinion it is.

I am concerned with your observation: “I feel like there are still some fundamentals missing.”  This is something we would seek to fix with our traders before expecting better performance.  

We are in the business of building very profitable traders- seven-figure-a-year traders.  To achieve this success our traders need a very strong foundation.  Here’s where a trading foundation with cracks may crumble.  Here’s where this may become a danger for your trading career.  When you are trading with larger size and risk.

You cannot become a seven-figure-a-year trader without trading with larger size and risk, relative to a new trader.  You cannot become Your Best Trader, without the ability to trade bigger and take on more risk.

Here’s what happens when there are cracks in your foundation as a trader.  You trade inconsistently.  And this leads to doubt. And this leads to unneeded additional stress.  And this leads to missing some of your best trades.  And missing A+ trades leads to more underperformance.  It become a vicious cycle of underperformance because you have a few cracks in your foundation.

These cracks may show up in your risk management.  They may show up in your stock selection.  They may show up in your trade expression.  They may show up in your quality of trading edge.  They may show up in overtrading.  They may show up in trading on tilt.  They may show up in an inability to recognize a different market regime.  They may show up in a lack of a system to take trading profits.  You get my point.  They will show up.

And they will show up when you are slinging size.  And that will lead to some crazy losing days.  And those days are very hard, even for the best traders to manage financially, psychologically and/or intellectually.  The key is to stay away from as many of those days as you can.  Consistency wins in the trading game.  That key is a strong foundation.

Can you ask your favorite running back to make that essential first down in the fourth quarter without strong legs?

Can you expect your favorite NBA star to sink that game-winning shot while poorly conditioned?

Can you expect your favorite MLB pitcher to best a top hitter without data on the best pitches to throw?

Would you expect a rising tennis star to win a Grand Slam without a solid backhand?

Would you expect a rising golf star to wing a Major without the ability to consistently sink short puts?

Shore up your foundation.  Fix the cracks.  That is they way to become an elite trader.  That is the way to become Your Best 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]