How to Conduct a Professional Review of Your Trading

In this video get a glimpse inside the trading review process at SMB Capital. Mike Bellafiore, Dr. Brett Steenbarger, and Max Ganik discuss best practices and what we work on together at SMB to help traders develop – looking at both the daily and monthly coaching process.

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we have a really good presentation today
on
reviewing your trading and and some of
the
best practices and some of the things
that we work on together at
smb to help traders
develop
[Music]
now it’s going to be really interesting
actually and we didn’t necessarily
intend it this way
but the perspectives that i present are
going to be somewhat complementary
to what max presents he’s going to be
talking a bit about
uh monthly summaries and
what i would call the bigger picture of
trading and i’m going to be talking more
on the micro basis
day to day some of which is based on how
i actually coach myself in my
own trading so you see here uh my name
brett stevenbarger and
traderfeed.blogspot.com
that is my blog url
and you can find my email address there
and you can find lots of articles
about trading psychology and other good
things
including reviewing trading
okay so let me get into
how i structure a review
and three areas that i believe are
crucial to reviewing trading whether you
are a
longer term trader a shorter term trader
the first is grading your ideas notice
the word
grading you’re giving yourself a grade
oh that looks like good beer there in
the picture what do you think
um so grading your ideas means you’re
evaluating
the idea behind your trade and notice
with number two
grading that you’re trading the idea i
am separating
out the idea generation i’m separating
out
the i quality of the idea from how i
trade that idea so the first question
i’m asking in my review
and this is something i do end of day
every single day
was this the right idea did i trade
an idea that genuinely had an edge
behind it
or perhaps did i get a bias
during my trading was i unduly
influenced by a particular flow in the
market or a particular piece of news
was this a trade with a genuine
edge and those of you who follow my blog
know that i do some statistical studies
to try to figure out where we might have
some edges
but i also want to figure out if the
market itself is behaving in a way that
is consistent with that edge
so is this an idea that’s truly playing
out
second my grading of the trade
based on that idea how well
did i enter did i enter with truly good
risk reward or did i end up chasing the
trade
and wind up with poor risk reward
how was my sizing of the position
did i have a plan for not only
sizing it appropriately but maybe taking
profits along the way
in many markets i will
take profits on a portion of the
position and let a smaller
part of the position run how did i
manage the position while it was on
and finally the exit i have certain exit
criteria
when the market becomes short term over
bought or oversold depending on whether
i am long or short
i want to be taking that those pieces
off i
look at overbought and oversold on short
time frames
with a very short term rsi and with
the nyse tick the number of upticks
versus downticks among
all nyc shares and so i want to if i’m
wrong
if i’m going to be long if my idea is to
be long then i want to be
buying a downtick i want to be
buying when stocks are ticking down
and when we are making a higher
price low as i mentioned
on my site every market consists
of a linear component a directional
component
a trend along with
one or more cyclical elements there are
cycles in market
ups and downs even in trending markets
if i’m long i want to be buying the
oversold spots
at higher price lows if i’m short i want
to be selling
the bounces at lower price highs
and so i’ll use the nyse tick i will use
a short term oscillator
like the rsi to gauge
where those higher lows are in lower
highs
and that’s part of grading my trading of
the idea
can i jump in here with a quick example
of some of the work that we do with one
of the traders on the desk
so there’s one particular trader on the
desk who really wanted to short neo
thought neo was overbought thought was
up way too much
and okay that
that is up for whether or not that was a
good idea or not
and one of the ways that
we had the trader think about his trade
was
is neo going to be like maybe
some other stocks that we would expect
to
completely give back all the gains it
had made
or is it a really really strong stock
there were only
expecting a pull-in for
and this trader
also structured the trade in a in a very
solid way where he didn’t feel a lot of
heat on the particular trade because he
used options in stock
to make sure that he limited his
downside if he was a little bit too
early
but the trader didn’t just go out and
short neo
that the trader expressed his trade in a
way
that kept him inside of his guardrails
for his risk
and then we helped him judge the trade
based on it really being more of a
pulling trade as opposed to something
that we expect to go all the way back to
to where it came from
and you know we’re canally doing that
and so we and then we have that work on
neo
and we can compare that to another
really big trade
that we saw in jks
where the trader perhaps got in front of
something that
you shouldn’t expect necessarily to pull
in as much as some other stocks
and then finally we have a probably our
highest p l trader
had trouble pulling the trigger on his
trades
but we said hey you’re really terrific
at developing ideas
you’re terrific at that when you develop
ideas by yourself
we have a lot of confidence as a firm
that you should you should go ahead and
make those trades
and we could point to lots of trades in
the past
where he did that and made a lot of
money and so he could have more
confidence
in being able to make those trades but
but it’s this foundation you’re laying
right here dr steenberger for guys to be
able to work off of
so that they can get better and and
do more of their best trading anyway
just wanted to jump in with that
yeah great examples and so i’m grading
ideas i’m grading my training of the
ideas but i’m also
grading myself how well prepared was i
for the training day and that personal
preparation includes time
spent in the morning pre-market for
exercise physical exercise
reviewing markets reviewing the previous
day’s trading
i have a number of steps a number of
activities that go
into my preparation because i know i’m
going to be more focused
i know i’m going to be more alert and
prepared if i do those things
so every single day i’m getting at least
three grades
for the quality of the ideas that day
for the training of those ideas and for
my preparation
and if the ideas
or the preparation
short then i’ve got some things to work
on
now what i mentioned in the slide is to
review you have to
re-view this is
really key i review every single trade i
make
but i review it i literally replay
the charts i have all my screens up and
all my
different indicators and oh i go bar
by bar by bar by bar and i
relive the entire trade and
i’m evaluating the idea of evaluating
the execution
i’m evaluating quality of what
i did if you want to learn three more
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including the simple setup that we teach
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from that review that very detailed
review i want to identify one
what did i do well where did i
really make some good decisions and
how can i make sure that i’ll
do that those same things again tomorrow
what specifically could i have improved
i had a great entry on a trade today
it was really good it was a long entry
in the morning and then
i completely effed up the exit
and it ended up i i definitely should
have taken profits earlier
it went against me and i ended up making
some money but not nearly what i should
have
and and so right away what specifically
could i have improved
i’m going bar by bar by bar and how
could i have exited better
and that’s what i’ve learned today that
i will bring
tomorrow that i will and then i’ll
figure out
how will i implement it tomorrow how
will i do my exits better
so every single day is becoming
a learning experience this is something
i’ve written about recently
on my blog and in a forbes article
what state are you in when you are
reviewing your trade
you want to be focused because we
process information
more deeply when we’re focused but we
also want to process with emotion
when i’m going over bar by bar by bar by
bar
it is not a bloodless
clinical process i am
focused in and i’m getting excited
about what i’m seeing and what i could
do better
and that excitement that enthusiasm
is part of what sears the learning
into my head our reviewing of our
trading
is essential for deliberate practice
deliberate practice
in the research literature in psychology
is what builds expertise
we perform we evaluate performance we
make adjustments
we perform again we make new adjustments
and so that the quality of our reviewing
determines the quality of our deliberate
practice
and that ultimately determines our
learning that can become an every
day experience that helps us
move forward move forward so that we
always
have a positive learning p
l even on days where the financial p
l may not be so positive so yeah so i’m
just going to speak about basically what
are the four key pillars of my monthly
review
so when going through my monthly review
i’ll basically try to to uh outline like
the broader points
first it will be uh the the overview of
the month uh so for that or
for this point uh this means besides
just like uh what was the actual
result in terms of a p l how was i
executing on my trades and then also
what was
um my mental state throughout the month
um
you know like was i in the right mindset
and if not
why and if yes uh what can i do to build
on that
uh next is is it gonna be actually more
trade specific
so you know um i’ll be going through
uh uh my best and worst setups uh this
means
just like um which stocks or which
actual
trade setups and then the next part for
me is going to be
reflecting on goals for the month so
what were my goals incoming life for the
month
why did i achieve them if not why
was the market environment proper
for me reaching my goals and then
lastly will be my goals for the
following month
so now just expanding on each one of
these points
so for the first one it’s going to be
the overview of the month so for the
most part i’ll just
lay out maybe a few large paragraphs
and going through first what was the p l
and
uh whether or not uh this actually hit
uh my target
uh usually what i’ll do is i will have
multiple profit targets based up on the
market environment so for example if
let’s say
um you know the market environment was
absolutely perfect for me what was my
profit target
for that month if not then what was the
target for that month so for example
october for me was not a month where the
market
environment was that clean i overall did
not really get
a good feel for the trend so i
especially had a profit target for that
style month
whereas let’s say for more of a june or
september month
where the overall market climate for me
set up well
then obviously my profit target for that
kind of month
would be a lot more aggressive next
is gonna be you know analyzing like the
marketing environment but also trying to
dissect what kinds of setups
work during that month like what sorts
of stuff
could i be changing um what like new
style of trading like should i be
focusing more on
scalping on micro time frames or should
i be focused more on building into
larger trades
so you know going back to let’s say
a june month where there was so much
volatility and liquidity
that’s a month where you can look back
and say okay like this was
a month where you can really create
something special by just scalping
because there was so much intraday
opportunity but now if let’s say for a
month like
august where it was a much slower
environment but tech just kind of slowly
grinded up
throughout the month and then sort of
went parabolic
you can look back and say that was more
a month for
building positions right so what sort of
a market environment works best for you
will also dictate
what your profit target should be for
that month uh so then just like the last
part
isn’t to be the uh psychology grade
basically just like going over
what was my like mindset throughout the
month and um
was i in the right mental state to put
on risk if not
why was that was i being more cautious
for a certain reason did i lose
my sense of of edge for some reason
why was that was it smart was it you
know it’s something that i have to
reflect on and then grow from and try
and be actively making
adjustments the following month so now
just kind of uh diving deeper into the
actual
trading part of the monthly review
uh the first step for me is to identify
the best and worst
um you know just like style symbols so
for me like that will break down into
either large cap names like your apples
your
a tesla you know your your tech stocks
the next part is going to be in low flow
style trading
and then even more from that you know
uh besides just just breaking down like
the
the style symbol or the market cap also
the
liquidity you know because there are
many large cap names where the liquidity
on an intraday basis
is not too great do you uh trade those
better do you
uh trade those worse there are you know
are also
names like for example i mean like neo
where it’s super liquid
and you find that it’s possible that you
are
having trouble trading those style names
so being able to
go back and reflect on the actual
symbols that are best will allow you to
better game plan for future trades
next is time of day and this was
actually a very big one for me
early on in my trading career where i
noticed that i was giving back
a lot of p l from the 11 o’clock
to 2 p.m hours so the midday session
which is quite common for
many traders but uh being able to
visualize this
and and see exactly the times that i’m
napoleon
is assigned to me that i should be
either one risking down or two just stop
trading then
unless there’s a very specific scenario
that would warrant me trading so for
example
right now i’ll be barely trading during
the midday session
unless there was some sort of a breaking
news event or something where there was
a volume explosion such that the action
in the midday session
is not your typical midday but rather
uh almost trading like a a opening drive
or
or the first like 90 minutes um and then
the last step would be to then
uh select those specific setups so
were you really good at trading opening
drives but
you were poor at trading candlestick
breakouts
were you really solid at putting on
overnight positions
or were you not and being able to
clearly go through that list
and then be able to identify which
symbols or or which setups you should be
sizing up on
and which you should be sizing down on
is gonna be uh critical for you
uh taking your trading game to the next
level um you know
one thing uh for me that i found was
that
over the last like six weeks or so the
overnight
positions have been more profitable for
me so seeing that and visuals
and visualizing that through my review
i’m able now
to size those up with confidence
if it means to write bullet points for
the trade
whereas i’ve seen that some of the more
intraday setups that
that worked for me in the past are now a
lot less
consistent and seeing that now i know
that i should be sizing
down on those trades until i regain
the same consistency that was present
you know a few months ago next is going
to be reflecting on
goals for the month so we already spoke
about
profit goals but there’s also a
psychological goals right so
for example maybe you wanted to
set you know a goal for a certain
mindset that when you’re trading down uh
you wanted to be more responsible
you wanted to stop yourself that when
you started to
see yourself spiral or maybe you wanted
to push yourself
more when you were trading up you said
that you found yourself
kind of a little bit hesitant to
put on risk when doing well whereas like
you feel so
that that’s like the next thing that you
need to to
accomplish to take your training to the
next level
being able to go back and reflect on
this is
you know extremely important and then
also uh personal goals
you know as well um besides like your
actual
trading life that you also should have
goals for your personal life as well
because obviously what what goes on in
your personal life is going to
impact what’s going on in your uh
trading life so this can go from
what are your social goals what are your
fitness goals all this will matter
so that way you’re in the right state of
mind for when you
come to the office and trade and then
you know the next point is
how did your overall process in your
trading improve
or worsen did you find that your game
planning got better did you find
that the way that you were
talking through with your team was um
what you set out to do you find that
maybe you’re not speaking with enough
traders and that’s
harming your performance going through
all those points will
allow you to improve your process and
you know it
it’s ultimately going to be that process
that is going to
dictate what that uh profit is at the
end of the month
um and then lastly um
which moments in the month were pivotal
in regards to your goal there’s going to
be probably
two or three days in the month that are
going to set the uh
a tone for the month like those are
going to be the days that
you really have to execute on so that
way you reach your
your goals for the month did you or did
you not and
why um you know there were specifically
certain points last month where i
recognized that i did
execute on you know on those goals and
when i didn’t
and being able to go back to those key
moments that way the next time that
those same moments pop
up you do the right thing um or you even
uh double down on doing the right thing
is gonna be critical for you
achieving your goals for the following
month and then as far as
goals for the following month just kind
of adding on to the last slide
is what is it going to take for you to
push that your trading to the next level
you know it’s not going to be
enough for you just to set a goal for
how much you want to make
or what sit-ups that you want to do what
is that barrier that’s stopping you from
becoming the next
incredible trader and everyone you know
has those barriers and now so you know
it’s the time to
look back and say what is the thing that
i could really
um improve on that if i do that’s going
to
take my trading to the next level and
then next
what obstacles lie in your way i would
say that you know
if there are certain psychological
obstacles
while trading that lie on your way or um
those are probably the ones i’m sure
that dress wouldn’t agree
are the key to fixing because you know
trading is mainly mindset i think that
any trader would say that
so once you fix that if you
have your process uh you know in order
then it should be a lot easier for you
to swiftly
accomplish those goals and then identify
the parts of your life
outside trading which speaks to the
personal goals
because i promise you that if you you
know
accomplish certain goals that you set
out in your
outside uh your life then your mind will
be that much clearer
you’ll sleep that much better and you’ll
probably execute on your trading goals
that much easier and i’m just going to
go to a few excerpts from my
monthly review um just to illustrate a
few of the points
uh this speaks to the uh top setup slide
so basically
identifying clearly that my best trades
were
scalping and using my uh tape reading
skills so now
what is now my next goal right is to use
what
i was best at to try and improve on
another part of my game
could i use those scalping skills and
tapering skills
to now size up and build into a
a more swing position and this will
allow me to
to take one of my strengths to then
apply that to try to maybe
reach or to surpass that barrier that is
stopping me from let’s say being
you know even better trader and then
what were my bottom plates
you know identifying what were the worst
setups should
tell me the stuff that i should be
focusing less on
and then what stuff should i be sizing
down there’s no point
in me giving back half my day
on trades that you know aren’t really
setting up for me
and being able to clearly identify that
will probably
um help you reach that profit target
that much easier the next point here is
going to be a reflection on goals right
so for me if let’s say
right now i’m looking to risk seven to
ten percent of my stop on some of my
bigger picture
ideas if i can go back and identify what
were the setups
what did the tape look like how could i
have potentially risked 20 percent
and then trying to accomplish the goal
of let’s say bigger
picture trades could i have
held risk for longer and then possibly
you know use those those tapering skills
to actually stay in that position so
being able to
clearly you know identify what are those
key steps that you can take
that following month and this can also
speak to
you know to your execution style so
one thing that i did pretty early on
in my career was always a set out
to basically offer out risks so if i
sell half
of a of a position at a one r
uh profit target this means that
at worst that the trade is flat and then
i found that for my own trading that
anytime that i did that i would be
trading the
position in a much smarter way a much
more controlled way
my psychology was better so realizing
that i
you know i made that a clear goal of
mine
and that’s one of the first steps to
building a consistency is making sure
that you are putting yourself in a
position
where you feel confident and calm and
in full control in your trades so that
way you are managing it
uh properly and then this slide will
speak
to goals for the next month uh this was
especially the case for
uh coming from a environment where
you know spy was let’s say moving three
four percent a day to then moving two
percent a day
to now some days a intraday range of
only 0.5
right is to be ready for the market
volatility to
uh die out which for me would be kind of
a change
in what i’m used to seeing so being able
to map out
and mentally prep yourself for those
moments
will then you know allow you to not be
totally shocked and then be able to
to adjust more so in the moment so for
me that was one of my main goals the
next thing was
more of a psychological goal it was that
with the the increase
in my stop i have to mentally accept
seeing
larger losses you know at times as well
and to make sure that
seeing those did not push me to then
spiral to try to to
make it back because i feel so anxious
seeing those losses and then possibly
creating something worse
so mentally setting myself up to the
point where i accept
that that everyone has losses and that
at some point
there will be some drawdown that will
seem big and then
i still have to maintain the right
process and the right mindset
so that way i’m successful in the long
run
and then lastly uh something that i
think that is critical for
for everyone is really just kind of
taking everything
one day at a time even you know when
things are
going really well if you start thinking
in these grandiose terms then uh you’re
more likely to end up making a big
mistake but especially with
day trading the beauty is that you can
just kind of come in every day
if you want flat and then just
you know manage like the day properly
and
especially in times where you are
drawing down like you would be surprised
how just
one green day could just uh change
everything for you
and it can totally shift your mindset it
can kind of
you know ease the burden and then from
that point on just
sticking to one day at a time is
something that could potentially allow
you to get out of the drawdown
a lot quicker than you expect hey max if
i could just cut in here so
one of the questions that i get asked
frequently
and i’m sure dr seemberger asked this
question as well is we get a
question to our inbox from a very
ambitious
retail trader or independent trader and
the question goes along the lines of i
feel like i’m
breaking through but i’m not quite there
can you help me can you tell me the
thing that i need to do
that’s going to help me get to where i
want to get
and the things that we do at our firm
are the way for people to get better so
when that person reaches out to me
who wants to do better and asks how i
can help them to to do better
almost always they don’t do the work
that you’ve just done
so very clearly we are tagging
and measuring all of our trades so max
can tell you what his stats are on
breaking news trades
on vwop trades on
overnight trades they all have names
they all have stats he’s keeping track
of all of them
so when he comes to dr steenberg or
myself and our floor manager
and his team at the end of the month to
do his review
and he wants to get better he’s very
ambitious he wants to
be the next shark or be the next swang
or be the next willgis or be the next
dan g or be the next raf
right max you’re you’re you know that’s
absolutely
we don’t of course any and and and
that’s great that’s one of the huge
advantages of being at a prop firm is
you see those people walk the same halls
that you do
and if you are competitive in any way at
all you’ve got to be thinking to
yourself
i can be like that guy
and so
but that work is we are looking at your
stats
what you do well we’re looking at your
stats what you do poorly and we’re
crafting a plan for the next month
as to how you can trade your good trades
a little bit bigger and more often
and how you can eliminate your weaker
trades
from your from your trading and maybe
some research you spend a little bit of
time on to add to be a little bit
broader
with your overall goals and then all of
that
goes into exactly what you’re talking
about it goes into
you crafting your daily routine
of best practices that are effective
that can get you to that for example
maybe you’re being impulsive and you
need to eliminate that
we may need to look into your sleeping
we meet we need to
we may need to measure your sleeping we
may need to get you some mindfulness
practice
we need to make sure that you’re eating
right through the day
so happy to get those emails
from the next great trader on the street
about how they can do better and what
it’s going to take
but my answer’s going to be we got to do
this work
first to have any idea of what it’s
going to take
hey mike can i jump in we’ve got five
minutes left i just wanted to
add one perception
the odds
of a trader being successful
i have seen directly related
to the quality and detail of their
reviews
a more thorough and detailed review the
greater the learning process
the greater the odds of success all
right so do you have any go-to
statistical measurements that help
assess trading performance over a
specific time period
there’s a few stats on a trader view
that i will be looking at one is going
to be a
k ratio which is the ratio of your
wins to losses and just kind of tracking
that
similar to that will also be um mfe
to mae which is basically tracking
what is uh the average that or
what is your average uh winning a
position at the greatest point and then
what is your average losing position
and that one is specifically important
because it’s
it’s uh telling you how much he um
are you taking on your trades which is
information for you possibly
seeing at what point you know like
should you start uh
closing out uh your losers so for
example if you see that
your average winners are two to one
right and you start seeing that you’re
probably drawing down a little bit too
much for that ratio
that’s probably telling you that it’s
going to be a losing position and you
should be
trying to find a way to
close that out at a favorable price
possibly a break even or just a smaller
loss because it’s not
acting in the way that your winners will
usually behave
and then besides that um whatever
uh a measure is basically just you know
explained to you
um what is the odds of success
so going through uh you know the the uh
time of day
uh when percentage all that kind of
stuff is is also
extremely critical thank you next
question for beginner trader are there a
max number of trades that you should be
taking each day it seems like i get lost
when i have a large number of trades to
review for a day week or month
yeah so i would say that like the max a
number depends on the person
i think that that all goes on your
personality so for someone like me
who really started out in a scalping
mindset i would take
50 75 trades per day but they were all
small trades and it was just the way
that that you know i felt most
comfortable
i wasn’t comfortable at first being in a
position for more than
five 10 15 minutes that just was not my
style whereas
for some traders they’re best at
building
a trade you know one or two trade um
ideas for the day being wider and then
anything more
is just too much noise for them so i
think really just like figuring out what
you are mentally
comfortable with and what your stats say
is successful
you know they should go with if you find
that you’re being overwhelmed
then just i’ll cut that down i mean
right there
your psychological feedback is
is sort of giving you the answer for
what works because it doesn’t matter
what
what works for me for your trading only
matters what works for you
for your trading let me add just some
context to that so at smb
we trade what we call a stocks and play
system that’s the system that we teach
to our traders that means they’re
looking for stocks that have a news
catalyst or a technical catalyst that’s
where they spend their time
we ask them when they first start
to start with four stocks from the smb
stocks and play system
and then only after they show prowess
being able to trade those four stocks
consistently and they move around each
day depending on what’s in play
do they trade more than that you want to
do well at a small number
and then and only then bump that number
up
thank you how do you grade ideas and
execute execution do you assign a number
so for me um you know uh the biggest
uh checklist for me is is arvol um
especially because they were all trading
stocks in play arval
which tells you the relative volume will
tell you how active is that a symbol um
that day and you know especially for me
trying to do more
scalping trades a name that is doing uh
more volume and more
active will be more liquid and therefore
i’m probably going to be
more successful uh trading that symbol
than if let’s say the r ball was low and
there wasn’t that much liquidity
um so you know like that’s uh check one
uh where is it on the chart you know is
it doing our wall but it’s in the middle
of a six-month range
the odds that i’m going to get that
clean breakout trade or breakdown
is slim whereas if let’s say we just
broke all-time highs
on a 5-r ball
and like the stock is a crazy liquid
that to me
is setting up to be a a plus symbol
where now i should look for my a plus
setups uh if i could just jump in here
max use the great word
checklist i think different traders have
different items that go
into their checklist as far as what
makes a good trade
but if you have a checklist a b c
d this is what i look for to have an
advantage in the marketplace
then that’s what you base your grade on
if you
have made decisions based on all those
criteria
that’s an a trade even if that
particular trade didn’t happen to be
profitable
on that occasion thank you is there a
template or form available to keep track
of our training
so uh for me uh personally i’ll use a
trader view
which i believe that anyone could create
a account with
so that create or or that attracts like
my stats
as far as the actual trades um
you know you can definitely create that
that on your own basically just like
outline let’s say a spreadsheet that
where you
uh keep track of you know of the symbols
uh that you thought met your a checklist
uh a point a
right and then what was it the setup and
did that work and then
go back through that in a weekly review
and see
for those symbols where you believe that
it met
your checklist for those a plus trades
right did those work and then constantly
you know evolve with that process
until you keep uh refining what are your
a plus trades
and just kind of going down um you know
with that uh a review process but as far
as a
strict template um i think that
will just uh vary based on um you know
on the trader thanks guys we have time
for one more question here
how do you determine how big your trade
position should be
so for me especially i would say that
it’s going to be a
a comfort level for the setup and for
the degree
of confidence if let’s say i am
extremely confident
and i feel about i hear you
badgering carlton to give you more risk
pretty much daily that is true that is
true
every friday i run over around 12
o’clock and run over and beg for more
risk basically
um but yeah um um
yeah so in all seriousness i would say
that
for those high confidence trades
if let’s say i’m risking to what is like
let’s say like the proper stop
for this bigger trade idea i will feel
a lot more confident that i can risk a
bigger portion of my stop
because like the odds of let’s say
something like market
and efficiency or someone like removing
a certain bid or or offer that
that ruins you know a certain
tape trade is not going to be as likely
and therefore i can feel
confident that if i’m wrong i was really
wrong
rather than let’s say just being like
wicked out so for me like that’s how i
will
assess risk on those style trades but
the real answer also
is that it should go based on what you
internally feel a confident and
every trader will say that if like once
you enter the trade that you feel
extremely nervous
it’s too much risk if you thought that
that like the risk to the right stop was
20 of your daily stop and then once you
buy it
you know you start sweating obviously
that was like too much risk
and that’s like the feedback mechanism
for
you to size down that trade at least you
know
until you build up more confidence and
then
you are mentally in the game while that
position is on
for independent traders and for retail
traders the first step is to be
consistent
you want to be consistently profitable
first
and then from that point you worry about
sizing up so
and then after you’re consistently
profitable and you have some experience
you can really do a lot of good damage
in the marketplace last week we had a
huge trading opportunity and one of the
stocks
and our top traders asked for
50 percent more risk in one case
a hundred percent more risk because they
identified a special
trading opportunity and
this one particular person was given
tons of extra risk because this was a
special trading opportunity
but this is a consistent trader this is
somebody who
this year is up over 10 million dollars
in net trading
profits this is an experienced trader
and in fact
given that extra risk the trader went on
to make over a million dollars
in the particular trade but that’s after
being consistent and good and
understanding what their strengths are
and and getting bigger over time
uh one last quick thought i totally
agree mike the consistency comes first
maxi says something very important
you’re always risking
a portion of your daily loss limit
everyone should have a loss limit
based on the size of their account so
that they don’t lose
too much of their capital and what
you’re risking per trade is a fraction
of that daily loss limit hey go ahead
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* no relevant positions