Higher Volatility = Higher Trading Expectations

BellaGeneral Comments1 Comment

Hey Bella,

First of all I want to express how excited I am for this (SMB DNA). I have been trying to trade part time for years and have been on the edge of being good for over a year. I have had some personal issues with my dad’s health that has kept me doing the “safe” thing with my career but some recent changes really has me itching to branch out and go all out to see if I have what it takes to be great.

I have a few quick questions to make sure I’m getting the most out of this. The first would be that last night after our meeting (SMB DNA) I hammered out all of weeks 1 materials. I was wondering if its best to move on, go over it again or if there is something extra I can absorb in the mean time. I really enjoyed all the playbook checkups that I was able to see as a free member are there more of things like that or live trading i can see now?

I find myself having issue with intraday PnL management.  One thing that has always bothered me and I have yet to find an answer for is very relevant today. I thought I might mention this as you asked for questions and it may spark things to discuss in later meetings.

I have had my prop firm set a hard 100$ max loss until I am consistent and will start to grow it from there. You mentioned that your daily stop should be about half of what you make on an average day so I try to aim for a target of about 200$ a day. I find myself getting near my target many days and then giving it all back and sometimes to be stopped -100.

I think part of this is mental, wanting to end on a high so when I give a bit back I feel like I want to get back to the high point of my PnL and take sub optimal trades. I decided that starting this week I would stop at +100 just to get constant at doing that and try to just push that each week. The plan seemed reasonable until today.

I have been trading for a while so was able to recognize the uniqueness of today so pushed it all day and was able to make 11 times that risk amount with my max tier size being 300 shares. Although I am very proud of my trading today I don’t know if what is best of the long term. I don’t have enough of a “feel” to trust myself to know when I should or shouldn’t push it. Maybe a trailing stop on my PnL for the day? Targets until profitable then paper trading new ideas?

Thank you and sorry for the long email.


Awesome to have you training with us at SMB DNA.  One of the best facets of the training program (and yes it’s a training program not just an educational class) are the mentoring sessions.  You get access to the mentoring sessions we hold for our traders:

SMB AM Meeting

The PlayBook Checkup

These Guys are Good


While the online interactive classes are terrific there is even more to learn during these mentoring sessions.

I love the idea of you experimenting with a giveback rule.  It has been awhile since I have written about this.  From your example above, stopping yourself out for the day when you dip below $100 is an excellent idea.  Also, you are seeing a pattern in your trading.  You tend to give back money at just short of $200 for the day.  Your trade review after the close should pick this up.  You should adjust.  There may be something about your trade size and trade strategy that does not allow you to make much more than $200 intraday.  And that data you are recording gives you a signal to be more careful as you approach these levels.

I am a huge fan of building from a positive base.  Stringing together many more positive days above $100 and zero days where you give back your gains and end negative will be a significant step forward for your trading.  From that trading perch, you will be a profitable trader, focusing on building from your strengths to make more.

You do an excellent job recognizing changing market conditions.  The intraday trading opportunity is a multiple of the trading just two weeks prior.  If you could make $150 on a good day, in this market you can make 5xs more.  The volatility spike offers you that opportunity.

I have had many conversations/texts/chats/e-mails with our desk pushing our guys to think bigger.  We are seeing bigger numbers from some of our traders at the firm as a whole as we should with this increased volatility.

Let’s hope this trading environment remains for a few years.

I hope that helps.

Related Posts:

What is your giveback rule?

“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, options, forex and futures. Bella is the author of One Good Trade and The PlayBook. He welcomes your trading questions at [email protected].

no relevant positions

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