How new traders can improve their odds of success (dramatically)

In this video, learn how new traders can improve their odds of success (dramatically).
If you are a new trader listen to two veteran traders, trading coaches and trading authors share what is essential to succeed as a trader.
Let’s get to work on sharing this game-changing wisdom to help you improve your trading.

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because that does happen traitors say
you know i’m a trend follower i’m a
momentum trainer and we hear that all
the time
you hear that all the time yeah and so
i’m gonna i’m gonna try out for a
baseball team
and i’m gonna say well i’m a fastball
hitter that’s what i do
i’m going to stick to my style because
that fits my personality
well good luck when you have a pitcher
who throws breaking balls and off speed
stuff
the point being that you do have to
adapt
in this video learn how new traders can
improve their odds of success
dramatically hi i’m mike bellafiore
co-founder of smb capital and we’re a
proprietary trading firm
located in midtown manhattan and i’m
also the author of the trading classic
one good trade
and the playbook click our subscribe
button so you don’t miss any of the
videos they’re producing for you
in the trading community if you’re a new
trader listen to
two veteran traders trading coaches and
trading authors
share what is essential to succeed as a
trader
let’s get to work on sharing this
game-changing wisdom
to help you improve your trading i have
been able to have the privilege to come
here today to interview
two legends who have influenced so much
so i would like to introduce to you he
is a clinical psychologist
and a performance coach dr brett
steenbarger
and the co-founder of smb capital one of
the biggest proprietor trading desks
here
in new york mr mike bella fury so
hi guys hello hello thank you so much
for taking the time
to um record this podcast with us we
really appreciate the effort i know
the market is open right now and uh you
have your own
work and in terms of trading traders i
know you’re focused on about
60 is that correct yeah we’re watching
what they’re doing right now
right on the island that’s amazing we
have a smile on your face
mike we’re doing well today given given
uh
the market conditions yeah so if i get
up and run out of the room
that may mean things have changed yes
especially if he’s screaming
dr steve berger you have authored
multiple books on trading psychology i’m
an academic
psychologist i taught for 19 years
full time at a medical school i still
teach in medical school
so my background is as an academic
psychologist
who works with high performing
individuals and it started
with medical students and residents when
i was doing student counseling
and it’s grown into working with traders
and portfolio managers in financial
markets
but my background actually is in
psychology and in
teaching psychology and how did you dip
your fingers into trading
i actually started trading in the late
1970s
which is well before mike was born
and but in the late 1970s while i was in
graduate school
i became interested in trading and so
traded
equities while i was in graduate school
and just kept that interest but it was
always a side entrance and then finally
put those together when i wrote the
first book
wonderful i appreciate that you think i
wasn’t born in the 70s as of yet
but i was you were mike you are
also an author of two very important
books
in terms of how we deal with our work in
city security so
that is one good trade and the playbook
i’m just curious
how did your paths come across what was
the context of that meeting
actually dr simbarger uh suggested
and encouraged me to write a book and
put me in touch with
his editors and
i could curse at him for that because
writing a book is very difficult
that was it was a great experience and
the thing that’s really rewarding about
writing a book is people like yourself
reach out to people like us
and want to chat and we get to meet
people that
we wouldn’t just meet if we were just
traders
i understand yes um and so yeah so i
wrote i won with trade and the playbook
and we started smb in 2005.
yes and uh we have known dr steenberger
for a long time
uh and he’s been helpful
and instrumental in helping us grow our
traders uh
for almost 10 years now um informally
yes yes it’s been quite a while and one
of the things that led me to reach out
to mike and steve and the firm here was
that i
saw that their main interest
was in training and developing
traders yes and that’s what i do in
medical school right
you know it’s developing physicians so i
really
value education and training and doing
it the right way
and i saw that mike and his team had a
commitment to doing that
and so that’s how we ended up connecting
and eventually that led to
mike’s writing his book and other things
that is also the reason why
we are we from a third world emerging
market are all the way out here because
of the books that you’ve written the
blogs
that you’ve shared the videos have been
so instrumental in what we do and
one question that has always been on our
minds because um
our chairman when he started the prop
training firm
he asked himself this question as well
because the truth is is that
as an individual we all know that
developing our own personal training
skills is difficult
enough as it is why did you decide to
take on the task
of training multiple people to be able
to do what you do
if you want to learn three real world
setups that our traders use
including the simple setup that we teach
all of our new traders and the setup
that turned one of our traders into a
seven figure big money earner
check out the free webinar that we’re
currently running just go ahead and
click the link that should be appearing
right now at the top right hand corner
of your screen
that’s going to open up this free
registration page in the new window
so don’t worry you’re not going to lose
this video you’re going to learn more
in a couple of hours from this trading
workshop than from
years of online education it’s purpose
so i had traded my own account for a
long period of time
and i saw this opportunity
in the marketplace that
wasn’t being serviced okay which was
when i started i saw how people were
trained
and then in the middle 2000s i saw
lots of people who i had traded with
pushed out of the game unable to adapt
the market got much harder
and i didn’t see uh even the firms that
were
uh still succeeding they didn’t see them
offering a development plan
that was necessary for the harder more
complicated
markets that were present in in
2005-ish okay and so i had this idea
that
if we really focused on training people
from the beginning
the right way that we could build out a
great firm
and i didn’t see other people
doing it the way that it should be done
and
that was something that was interesting
to me and i thought well
you know what if we were to come along
and make it
easier for somebody to start right now
and give them a better chance
of succeeding and building a culture
that was
important to us to steven myself
what can we do and we thought we could
build the best prop firm we thought just
from that idea
we could build the best prop firm in new
york city because traders kind of
some of them don’t stay in the game for
as long as they think that they
they can markets are always changing
but we that was our purpose let’s build
the best development desk
out there and use it as a way to build
the best overall desk
in the city and i think you mentioned
that before that you could take in 10
traders
but you can’t guarantee that all of them
will be able to
succeed yep yes absolutely not i it’s
definitely not 100
and you know we know from research that
with day traders overall the
hit rate for long term success um
is under 5 wow so
it’s not even 10 out of 10 that’s 120.
um so the key question and as a as i’ve
said before though i mean
that’s not surprising what’s the hit
rate for professional
golfers who make their living from golf
what’s the hit rate
for professionals who sing and dance and
can make a living on broadway
you know we’re talking about elite
performance when someone can trade and
make a consistent living from their
trading that’s elite
performance by definition the elite is
not 10 out of 10.
so the key question is can a proprietary
trading firm
increase the odds the baseline odds of
success from that five percent
to something much more meaningful and i
think that’s what in different ways mike
and i
work on and we do if i may say so we we
do
there are the amount of resources that
you get when you come to a proprietary
trading firm
is vastly superior
than to you just trying it by yourself
and you know oftentimes i’ll talk with
people
who are having some success
on their own as independent traders and
retail traders
and they’ve heard of the success that
some of our guys have
and and that success being many
multiples
of what they’re doing um and and often
you know i’ll say to the people it’s it
is tremendous that you’re having
this much success even though it’s many
multiples lower
than the best traders here yes because
you don’t have the resources that they
have
you don’t have the buying power that
they have
which really makes a difference it does
you don’t get to work with dr steve
parker
oh geez there it is
which makes a tremendous difference you
know and
and i know you’re being humble here but
you know we just worked with
this one traitor um
that we is very important to the firm
going forward and we
identified uh a process
that they weren’t going through that
when they then went through it
identified their strengths
and their weaknesses the trader started
keeping really good stats
tagging their trades measuring their
trades keeping really good good stats
and working with dr steenbarger to see
where their failures were and where
their successes were and
from those stats can construct a plan
to to move forward effectively
and you might be an independent trader
without those resources and just keep
flailing away
exactly with the talents true to be able
to do it
because you have good in your trading
but but your losses are overwhelming the
goodness
yep and you know to have somebody who
coaches the
best trainers in the world look through
your work and point you
in the not just the right direction um
but the effective direction
that the game-changing direction is is
a resource that very few people get to
have me let me let me jump
in here because i’m going to add a layer
to what mike is saying
and it’s an important layer so yes this
trader did look at their statistics and
really benefited from learning about
their strengths
who was the one who went over their
performance
up to that point and pushed them to look
at their statistics
who was that person mike that was me
that was mike
but this is really important because
it’s not just
coaching coaching is really important
it’s the integration this is a major
point
for for your session here the
integration
of mentoring and coaching
someone who can work with the trader as
an experienced trader and someone who
can work with the trader as an
experienced coach
and the ability to put that together you
have someone like mike
who has all this experience he was
saying going back to the 90s
i wasn’t even born then
going back all the way to the 90s so
here’s this really experienced trader
saying
to this relatively new trader yo
yeah this isn’t working for you you need
to look at this you need to list it keep
stats
and then they come to me with those
statistics and i can help them make
sense of those
one point that i i found was really
interesting when i read one good trade
was that you said
everyone assumes that the best trader is
also the best teacher and you said that
that’s not true
do you i mean i read the book but i’m
sure some of our
listeners may not have necessarily could
you expand that because i thought it was
really
yeah and you said this in chicago i
thought he made this really good point
um about how we all have our own
strengths
and you know part of
what we’re all supposed to do is figure
out
what our real strengths are and
tap into them and and highlight them and
so
the skill of trading pushing the buttons
in real time
is a very different skill than being
able to teach
and coach and mentor somebody get to
the next level in their trading
they’re they’re just different skills
and what makes
somebody a great trader who can push the
buttons in real time
is different than what can help somebody
progress and grow and improve as a
trader
and now certainly and dr steenberger
would i’m sure you know i’ve heard you
say this
a bunch you need to have traders at the
firm
who are succeeding who are doing well
who people can copy
and a role model and a good first step
is to copy the masters as you like to
say
but then to traders will go on to make
things
their own so you
do need that exposure to
very real edge from a a really
prosperous trader um but you also might
need somebody
to be a good teacher be a good teacher
um and so there might be another layer
that we sort of
add to this in terms of what we’re doing
right here which is
traders join teams and when they join
teams they’re working with senior
traders
seeing their edges seeing how they’re
trading in real time and then they have
myself as a coach and dr steenberger as
a mentor
on top of all that that’s that’s helping
them progress and i will say that
the best trader at our firm
is pretty good at just about anything
but what’s interesting about the traders
on this team and they actually
as they think about it i’m pretty sure
they all are profitable
they all watch what the trader is doing
that the
the elite seven figure trader is doing
in real time
um but and they’re all they’re all kind
of trading the same stocks
okay and they’re pretty much mostly
trading in the same direction
but they all trade differently really so
they’ve all been exposed
i i know them personally i see their
stats
totally differently and yet they’re
inspired from the same source it’s very
interesting
most of our listeners our following
the majority are independent traders
very few are actually able to work for a
proprietary trading firm
based on your experiences both of you do
you feel that
one is necessarily better than the other
is there a huge advantage
of working for a prop trading firm
versus trying to do it
on your own and having access of course
like we do to your blogs to your
to your to your material is that enough
or do you think that there’s something
added
with joining a prop trading card can i
first respond and then uh
mike can chime in if he sees it
differently
to me it’s not the issue isn’t being an
independent trader versus a prop firm
trader okay the issue
is what are the odds
of your success and
what will maximize the odds of your
success
so i want to be an independent
athlete and make it to the olympics
well by odds that’s not going to happen
okay because the people who make it to
the olympics
get coaching they go to camps they train
and they need that support system you
know i’m gonna
independently be a successful surgeon
well that’s not gonna happen you need a
medical school training and then a
residency
training and you need multiple
mentorships
to develop those kind of skills so
being an independent trader
what are the odds that you’ll reach that
elite level of success
and how do they compare not just to a
generic
prop trading firm but to a firm that is
dedicated to curriculum
education training and training is
important and i’m
just thinking about my own kids i have a
five-year-old and a three-year-old
when you said that i i think of them and
so my son
for whatever reason really loves to play
basketball okay
we wouldn’t just put him out there
on a a black court and
let him progress by himself i mean even
at five he goes two programs
yes even at five he is going and doing
the types of things that five-year-olds
are doing
to get a little bit better they go to
swim
you know they want to swim in the summer
by themselves we wouldn’t just throw
them in the water and say figure it out
for yourselves
and so you know one of the things that i
think independent traders
think is i’ll just figure it out for
myself
you know i don’t need to spend a whole
bunch of money
investing in training because
the best traders are just born and uh
you know what we see from the traders
who’ve been successful here
and even outside of here is that there
are commonalities amongst them and
having a really solid educational
foundation
no matter what type of trader people go
on to bait is
is key being able to manage risk being
able to understand what moves markets
being able to find your own niche
understanding technical analysis
understanding how to use technology to
make more money understanding how to
find the right stocks prepare
prepare for the day review for the day
those things
are first and and we see
when traders are going to be really big
they become consistent first
say first they have to learn they have
to go through a development process but
then they become
really consistent and you can’t become
consistent if you don’t
have a really solid foundation and if
you
aren’t consistent first then you’re not
going to become a big
big big trader you go through a
foundational
training program and what is everything
you need to learn about markets to
make good trades and then there’s a part
two to that which is being exposed to
different types of
setups different types of strategies
that traders on our desk
are implementing to be successful and
exposing traders to those different
types of setups
and then asking them to experiment with
them record their stats try them out
see if they work if they do work then
start to put them in your playbook
my second book is called the playbook
the idea is you build your business
around
a playbook okay so that second part of
training is
exposure to different types of setups
momentum setups
pullback trades break out trades market
plays
etc the stuffed trade we have all these
fancy names
uh and quirky names for the for the
trades and you try them
you try them for a week and and you
experiment them and if you like them you
you archive those setups and you put
them in your playbook
and you work with them a little bit more
and then you move on to the next setup
and you see if you like that setup if
you do then you put it into a playbook
and then maybe try another one you don’t
like it so you forget that one and you
move on to another one
but the idea is people are being exposed
to setups with edge
and then they’re finding out which ones
work best for them
and as dr steenberger says really really
well
you want to trade strategies that build
upon your
cognitive uh and your
emotional strengths your psychological
and your cognitive strengths
and you want to be building that
playbook not just
around somebody out there who makes the
most money
because somebody out there who makes the
most money you may not be able to
trade like that those setups may not be
best for your cognitive and if your
emotional skills
but there might be and there’s different
people out there trading
different in different ways and so you
want to be exposed to the different ways
you can make money and then choose for
yourself
the path that you’re going to take to to
grow as a trader
you know one of the guys who’s we’re
really excited about
into the end of this year and and for
next year
i remember when he first came in
to talk to us about bumping up his risk
in a particular strategy and i remember
being really uninterested in talking
about bumping them up in this particular
strategy because i didn’t actually think
it had a lot of legs to it
okay and he put down his
trading stats in this particular
strategy in front of carlton our floor
manager myself
and the equity curve was just you know
gorgeous i mean it was
it was just beautiful it wasn’t straight
up and
you know he’s sitting there asking for
more buying power and
carlton are like of course we’re going
to give you more
power um and you know he’s kept
and and he trades away that that’s a
it’s a very it’s a it’s a specific niche
and again at first i was like can you
really like
build a can you really build a career
out of this and he’s kept
trading it bigger trading the strategy
bigger trading the strategy bigger
trading the strategy bigger
making more money making more money uh
then slowly
creeping into other ways to make money
that are similar
to this unique niche and then teaching
people
and then teaching people such that the
the guys under him are really starting
to
to progress we’re seeing great progress
this month from from some of the junior
guys
and so you know you don’t want to be the
guy who says you have to trade like this
yeah you know if i would have been that
that that teacher who was like no you’ve
got to trade like i do
you know or you got to trade like shark
does you’ve got to trade like swang does
you know who knows what would have
happened
to that particular trader yes um
but we let him do what he wanted to do
and he got exposure to something
that had edge and and ran with it and
i’m as excited about his team
as any other team on the desk
and so it’s it’s it’s it’s that
breadth of exposure and choosing
what’s best for you that i think it’s
missed sometimes in
in trading education you mentioned that
there are
different personalities you have to work
with different kinds of individuals
all their training styles are obviously
not going to be exactly the same
i also read in one of your books before
was that
you are integral in terms of the hiring
process as well so can i can i ask what
exactly is your role
how do you hire traders how do you
determine whether they are a good fit
for smb capital and what are the
what is the criteria involved okay well
i work as a consultant
with smb yes and i also work with
other hedge funds money management
organizations and in some cases help
them
with their hiring process and and the
idea
is to help them understand what goes
into success
encourage them to study their best
traders and then use that information
to help them ask the right questions and
select for the right things
with applicants in your end is i mean
you’ve always mentioned
that trading is a performance sport can
you expound a little bit on how you
choose
who you want to recruit for smb no
that’s probably very important oh sorry
i’m sorry so uh
so dr steenberger did us
help us study some of the people that
have done well here
and we have a distinct culture here
that’s important to us
i do think if you walk the halls of
bessemer capital
you should notice something different
about our traders
and even our top traders which is
they’re trying to get better okay
they’re not talking about just their
p l they’re the best traders aren’t
satisfied
even where they’re at they’re pushing
for
more for better for improvement
um so you know we we start with we got
to have people
fit into that culture yes so sometimes
athletes are are a good fit because
they have a history of delayed
gratification
they have a history of working at things
to get better
um but sometimes athletes aren’t a good
fit because they don’t have some of the
other characteristics
processing ability interest in trading
yes i wrote in one good trade about a
particular
former athlete who we hired who
did have that really good buy into
to the culture that’s important to us of
work at something and
you will then get better at it and had
done that as a college athlete
in basketball and i came to trade with
us and very clearly and very early we
recognized
he wasn’t interested in trading at all
you know he was
you have to you have to you have to
really want to learn and study trading
and so
yeah for us we want people that are
interested in trading generally that
means they’ve done it before we want
people who want to try and grow and get
better
we talk a lot more these days about
having some coding skills to use the
technology that we have here
certainly people who are even tempered
are
preferred people that are conscientious
are preferred
so we have a whole list we’re not going
to give you all of them that that is
your
that is your secret to hold uh based on
your books you’ve mentioned that
even their personalities outside of
the office is something that you look at
in terms of simple things is
being on time not being late for work
yeah as i get a little bit older i i
have
become a little bit more open-minded to
the different ways that people can
become successful
i can tell you that conscientiousness is
a
large factor in success but i can also
tell you that
some traders are just different you know
there’s one particular trader
on our floor who’s just different he
just
he learns differently he’s not going to
sit down
and write out a bunch of notes honest
trading
but he will go talk to lots of different
traders
about his trading and about their
trading
and that’s his that’s his way of
studying
he’s not going to come in at 7 30
ripping through a bunch of research
reports
it’s it’s not his it’s not his thing but
he does work hard in his his own right
um he’s conscientious in a different way
and so if i were to sort of say you have
to get in at a certain time
to this one particular seven trigger
trader
that wouldn’t really work for him um
it’d be like saying you have to trade in
a certain way yeah
yeah you have to let people be who they
are
and people can have different ways of
being creative different ways of being
conscientious
so i have another question does the
bottom line the seven figures that
you’re saying
can they use that as leverage for them
to perf to not necessarily to follow all
the rules
assuming that they bring the results to
the table yeah but they are fun so that
the particular particular trader is
following
the underlying roles the underlying
rules are their rules
and that gets back to what you were
talking about earlier mike is people
learn their own playbooks and so they
develop their own rules and they’re much
more
likely to stick with their roles because
it’s their
rules it’s not something that brett said
or that mike said
it they develop their playbooks and it’s
their rules so they
own it and i think that’s why they’re
more likely to stick with it
yeah look at the beginning when we hire
you and we expect you to do a training
program you don’t show up on time
that’s a problem okay that shows a lack
of seriousness
yep um that shows a lack of respect
for the investment that we’re the
massive investment that we’re making
into you
massive investment not just in
monetarily but in time and and all the
technology and resources that go into it
um and and how important i mean that
seed is a
very valuable seat that lots of people
want to have
and so if you can’t show up on time
we don’t we’re not going to have a lot
of tolerance for that but as you mature
and develop your own playbook and your
own way of working at markets and
reviewing
there’s latitude for that the the guys
but the best traders work at it and
differently but they work at it
with every trader their setups are
different those setups that work for
them are different their personalities
once they once they start trading is you
know it’s not the same
but you mentioned that the ability to
adjust
to markets is so critical into the
success of every trader
does that mean let’s say for example you
are a momentum trader or this is the
kind of environment that you work with
as is but the environment changes that
is not necessarily fit for you
what do they do then how do you i mean
you mentioned that you don’t mandate how
they trade right you cannot tell them
that you have to do this this this
yeah yeah let me jump in because that
does happen traders say
you know i’m a trend follower i’m a
momentum trader and we hear that all the
time
you hear that all the time yeah and so
i’m gonna try
out for a baseball team and i’m gonna
say well i’m a fastball hitter
that’s what i do and i’m gonna stick to
my style because that fits my
personality
well good luck when you have a pitcher
who throws breaking balls and off speed
stuff
uh the point being that you do have to
adapt to different conditions and
we’re seeing that in the equity markets
right now things are much more volatile
than they had in recent years
and an uptrend has been nicely broken
so we have to adapt uh to those things
and what that says to me and this is
something mike you and i have talked
about
is that it’s not enough to provide
education
to traders we have to have continuing
education
that’s what we see with physicians there
are new technologies that come out there
are
new there’s new research about different
approaches
you know these days we’re doing micro
surgeries
where we used to open the person up you
know
all that technology is now available
that takes continuing education
physicians have to get a certain number
of continuing education credits
to stay licensed so we need to provide
continuing education for traders to help
them adapt to changing
market conditions and that’s what i
think
has been successful we’re doing that
right now so
normally we trade what we say
our stocks in play okay we look for
specific stocks
that have unusually good news or
unusually bad news that’s been
unexpected by the market
and our thesis is you trade those stocks
because they offer more opportunity
than other stocks yes that is normally
what we do
in this market when volatility and
you’ve said this when
when vicks hits 15 and
you’re an active intraday trader you
need to think about
trading the overall market like it was a
stock in play
we have vix above 20 for most of this
month
so what we’re counseling our traders
to do and this is challenging because
their expertise is trading stocks
which what we’re encouraging our traders
to do
is to trade marketplace to trade spy
q iwm vxx
uv xy tvx
to to trade these instruments where we
would normally say
don’t trade them they don’t move enough
you’re just going to get chopped up
and and these traders have had to take
the leap
into these products that they don’t
trade that often and
figure out how to trade them well and so
dr steenberger will talk to them about
and he was a futures trader and is a
futurist trader
uh presently and so has some some really
good insight on to
and i think always people always think
you’re a trading psychologist and you
work on
people’s minds and right what he really
does is work to help people gain edge
and so an example of that is okay we’ve
got to trade marketplace now
here are some indicators that you’ve
never really looked at that much
that if you look at will help you trade
marketplace
better and let me point them out to you
and so
uh the the traders on the desk are
you know even even seven figure traders
who are really good trading stocks in
play
some of them are not that good trading
marketplace and some of them are really
using this
present market regime to improve
on their market plays overall look the
best traders are
going to get better and and do well even
when you you should but they have you
know they have to shift over that they
have to trade these other
they have to trade these other
instruments and
you know we’re seeing this
internationally as well
and i’m seeing this with other traders
at other prop firms
who understand that they need to
do more of what they were doing to to
trade these markets overall
that they’re a little bit uncomfortable
doing
but some of the traders have done pretty
nicely
and but it’s it’s it’s a learning
process for them the next time we see a
high volatility marketplace they’ll
trade a little bit better the next time
after that they’ll trade it a little bit
better
but yeah i mean you’re always a student
you’re always learning even the
experienced traders
you know they’re learning new things and
that’s part of what keeps it interesting
and exciting for us
because they’re always learning yeah and
and you know one of the
biggest challenges with trading
marketplace in this market
environment is is not just uh how to
uh identify good longs and and good
shorts but but the added wrinkle
in this marketplace is that you actually
have to trade the move to move
the traders that not so not only do you
have to trade
market products this month in these
products
but you you have to also trade them on a
tighter and shorter time frame than you
do
even with your stocks in play for a lot
of these guys and so there’s that
added complexity and adjustment that
that they have to
that they have to go through what’s
really interesting is that you mentioned
that
consistency is so critical in terms of
training development you have four
stages is that correct
i’ll go through some i’ll go through
some stages that we sort of see the
first stage is learning
yeah and another step is consistency
and then when we see people who are
consistent
we want to have them trade bigger
from the trades that they’re doing well
and try and trade a little bit bigger
and then the next stage after that is we
want to see
traders expand their playbooks okay
and then the next step after that is to
be more sophisticated and how they
express their edge
equity trading that means trading
options so how do i structure
a trade with options that gives me a
little bit more exposure to my idea
and and and also maybe gives me a longer
time frame
that can help me supplement what i’m
underlying doing with my trading okay
and i’ll just add one
little observation here you know we talk
about stages as if it’s a linear
progression but in fact what’s happening
as a traitor becomes consistent and then
they start getting bigger
once they get to the point of getting
broader and once they get to the point
of being more diversified different ways
of expressing traits
they go back to the first stage which
was learning
and so it’s it’s not just this linear
progression that the the traitors
succeed
and then they go back to being learners
yes and that helps them become broader
that helps them learn about things like
options and they succeed at that and
then they become a learner in a
different
way how do you measure sorry how do you
measure
um consistency is there a weight i mean
is it just you’re you’re batting 100
with every trade you should be making
money with every trader is there a
different way of seeing it
these statistics yeah statistics um risk
adjusted returns
how much money are you making per unit
of risk that you’re taking
uh you know that’s an important measure
so
all of your guys need to keep track
right you got they they keep
their journals you have your records and
every trade
so they keep stats they upload all their
trades
it spits out all of their stats okay
time of day
how do they do how they doing in
particular stock how they’re doing over
the week
how they they tag their trades how they
doing in a breakout trade how they doing
in a momentum trade how they’re doing in
a marketplace trade are they doing on
stuff
trade are they doing a low flow trade
and they’ll they’ll see those numbers
start to come out because they
ultimately they do
want to grow their trading they want
more buying power
and they know to get more buying power
they have to demonstrate
some objective success yes
and so that’s what the statistics will
show i will say that independent traders
if you if you talk to them
a lot of times so if if you go talk to
the better traders
on the desk they will be able to tell
you
where they make most of their money the
types of trades they make most of their
money in
if you were to go talk to an independent
trader they probably
who wasn’t doing as well as they want
they probably couldn’t answer that
question they just don’t have the
resources
to be able to track all their trading in
a tagged way
has happened here and if they did that
they that that could be
the reason that’s holding them back from
being profitable just just that just
that understanding
my last question um given this this
environment
um how do you deal with traders
who are losing money psychologically and
uh
in terms of getting them back on their
feet we because
our experience back home is that usually
once they have a
major drawdown they tend to kind of
immediately
lose focus it’s a little hard for them
to get back into
you know to the grind so in terms of
mindset what is
your advice yeah and this is another
area
where being part of a trading firm is
valuable
because there’s something called risk
management so i’ll do a shout out to
carlton here
but people don’t go through major
drawdowns
because there are risk limits on the day
and there are risk limits
you know over time and so that protects
the trader psychologically so
that you don’t have to get into the
situation of oh my gosh they lost so
much money can they ever
come back and they ever succeed you’re
proactively
addressing that through the risk
management
but the big question is if they’re
losing money
today this week this month are they
losing money for the right reasons
in other words in a process sense are
they doing the right
things because we know that returns
can’t always be consistent every day
week month and so forth
and so i think we deal with things as
mentors and coaches very differently
if they’re losing money for the wrong
reasons versus doing the right things
that just don’t happen to be working out
at that juncture in time i will counsel
them to go back to being consistent to
focus on being consistent and then to
drill
deeper into that what are their a plus
setups make the game easier so you’re
going through a period where you’re not
seeing markets well make the game easier
stick with your a plus setups bring your
size down
put up a couple of green days get your
confidence back
build your confidence yep make the game
easier
stick with your best setups until you
have a
series of green streaks in a row and
i’ve seen that work
very well with some traders yeah do you
ever believe
there is such a thing as a hopeless
trader not everyone has the skills and
the ability
uh or the temperament to be a successful
trader i mean hopeless
uh you know could i be successful
as an nba basketball player no i would
say i’m hopeless
you know okay i mean that’s just a
realistic assessment a rational
assessment
based on the fact of my stature my
leaping ability
i am hopeless okay yeah so is there a
hopeless traitor
if you said there wasn’t then you’re
saying anyone can succeed at trading
yeah and in a performance field that’s
ridiculous
not everyone because there is a huge
misconception that when people come in
they say oh there’s money in trading so
i just want to be a trader and then they
immediately assume that it’s
and i’m going to jump in here because
there are a lot of
bad guys in this industry who will try
to sell
services absolutely to tell people that
anyone can be successful and you could
be sitting on that beach
placing your trades and you could be you
know that is the dream
that is the idealistic dream yes that is
not a dream that is a fantasy
and uh there are a lot of people who
will prey
on the hopes and dreams of people who
need to
make money the reality is even with the
training
even with all the education the number
of people who
make those big six figures big seven
figures
is not going to be the majority of
people
but we can meaningfully improve the
odds of those success with the right
kind
of teamwork the right kind of mentoring
the right kind of coaching
the right kind of curriculum and that’s
the best we can do
and that part is not hopeless i’m going
to toss out a big picture idea
sure and uh yeah i’d be interested in
your reaction to it we talk about
traders continually learning
how many prop firms are there around the
world
that take training seriously what would
you guesstimate mike
i think you could speak better around
the world
well not so much in the prop world i
mean i have so much experience with
hedge funds and so forth
um i know of some but
what would you guess just within the
urine experience that really
uh are invested in training and
development of traders
uh there’s very few really good prop
firms as there is even in new york city
you’d be yeah
people would be surprised yeah i could
name them
i wouldn’t be able to fit them on my one
hand okay
okay maybe you can fit them on both of
your hands but yeah no i think
you’re absolutely right it is a limited
number it sounds like caleb
is trying to do this very thing and i
i have encountered you and i’ve met some
people globally
who are trying to do these things
wouldn’t it be interesting if
periodically
we could get together as trading
organizations around the world
and share our best practices in terms of
developing traders and what’s working in
the philippines what’s working in the
u.s
what’s working in australia what’s
working in london
and you know periodically share what
we’re doing that’s working and how we’re
helping traders that
learn that would be i’m sure we would be
able to
learn so much more from you guys than
you would first but either way
it would be a remarkable experience for
that to happen well i i think that
so so not only is each trader
continually learning but we
as mentors and coaches of traders were
continually learning
so food for thought but i think that
could be an
interesting development as long as we
meet at very
exciting destinations globally
i just really want to say before we end
this
i want to thank you both profusely
because
not a lot of people are as generous in
terms of sharing their information their
time
and their knowledge about how to be able
to trade stocks so freely
it’s a complimentary um exposure
already for everyone across the world
globally because obviously we’re from
the philippines we are literally from a
small island
you know and because of what you have
been able to do
and what you’ve been able to share we
have grown
tremendously and i i really need to
thank you both well thank you thank you
perhaps the greatest part about it is
that i read also in one good trade that
you said 2008 was
obviously a critical year for all
traders
and you put a lot of heart into it
because you said that even if you were
making a lot of money
in 2008 you had wished you were making
money in a different manner because
people were not others were losing their
jobs and so
i remember that feeling i remember
feeling just stop
just just stop can we just make the
market stop going down
and uh it was uh
and it was a weird feeling because here
you are seeing these guys
who are having new highs in p
l and and breaking out and succeeding
and yet understanding what that really
all
meant and uh i really kind of just
wanted it to stop
more than just the money yeah well one
of my big trades when i was developing
myself as a trader
i was uh coming into the session
really short okay and so i’m watching
the
pre-market you know and the market just
dives i mean i’m making a great amount
of money
and i call a friend i said what’s going
on you know some news house that came
out
well it was 9 11. and
there was no joy in making that money
you don’t lose your humanity just
because you’re focused on
making money as a creator because back
home i mean
we are exposed to media and to what we
see on tv and that’s mostly it
right everywhere i mean i’m sure
majority of
people who are following caleb or city
securities they they haven’t even had
the opportunity to come here
to see that yeah so what they see is
like wolf of wall street they see people
driving ferraris this is
it’s more just material versus what you
guys really actually do
which is there’s a value to it
because you know that you can make money
not off of other people are you making
money you earning it
earning it through this industry not
taking it not taking advantage
of other people and that’s something
that i really resounds between the two
of you
and i speak on behalf of our entire team
back home that we really do appreciate
that
well thank you thank you thank you very
much thank you thank you both for your
time
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