Is it possible to trade bigger while reducing risk and stress?

BellaBella Daily Update

Yesterday Shark, one of the top traders at our proprietary trading firm in NYC, shared his new dynamic hedging strategy with other firm traders.  Specifically, he reviewed how he attacked his recent hugely profitable short trade in GME, using this dynamic hedging strategy.  This was a trade that netted sizeable trading profits, but the role-modeling that Shark did was so much more important than just his PnL.

Shark role-modeled the importance of working to improve, even when already a 7-figure trader.  If a 7-figure trader is working diligently and pointedly to improve, then shouldn’t everyone else?

Shark wanted to trade bigger, while reducing his overall risk, and thus his trading stress.  He marked this as his goal and sought to achieve it.

So he developed a new dynamic hedging strategy to recognize this goal.  The details of the strategy are a bit complicated for most traders and they are not super important to the main lesson from this post.  Let’s leave them out.

Often I hear from traders who want to trade bigger.  Many fear that their trading psychology is in the way.  During Shark’s presentation, Dr. Steenbarger highlighted a key takeaway from Shark’s chat.  One I have not seen mentioned by trading gurus.  Shark had improved his trade execution to improve his trading psychology.  Shark improved his trading to improve his trading psychology.

I fear that many new and developing traders are propagandized to believe that to become a bigger trader they must learn to be able to stomach losing more.  I fear they believe that they need to be able to handle drawing down large amounts of money to make the big money.  We do not see that at our firm.

Let me pose some questions for you to consider to help you trade bigger, with less risk, and with less stress.

What if to trade bigger, you focused on the trades that work right away for you?

What if to trade bigger, you doubled down on your risk management per trade?

What if to trade bigger, you asked what trades were not worth your time?

What if to trade bigger, you focused on ensuring your highest risk trades were not stressful to you?

What if you saw your trading psychology as an asset to be protected and necessary to trade bigger?

Perhaps, answering some of the questions above is what you need to trade bigger and grow your trading account.  Perhaps, this can be done with much less risk and stress than you used to believe.  And if you do, then you would be trading more like Shark.

Train and trade well!


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].